<PAGE>

                           RECEIVABLES TRANSFER AGREEMENT
                                          
                                          
                                    BY AND AMONG
                                          
                                          
                        ARCADIA RECEIVABLES FINANCE CORP. V,
                                     as Seller
                                          
                              ARCADIA FINANCIAL LTD.,
                            Individually and as Servicer
                                          
                        PARK AVENUE RECEIVABLES CORPORATION,
                                          
                                    as purchaser
                                          
                             THE CHASE MANHATTAN BANK,
                       as Funding Agent and Back-Up Servicer
                                          
                                          
                                          
                                          
                            Dated as of October 16, 1998


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<PAGE>

                                  TABLE OF CONTENTS
<TABLE>
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                                                                                 Page
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                                      ARTICLE I
<S>                                                                              <C>
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.1  Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.2  Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 1.3  Computation of Time Period. . . . . . . . . . . . . . . . . . . . . . 32

                                      ARTICLE II

AMOUNTS AND TERMS OF THE PURCHASES . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.1  Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.2  Making Purchases. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.3  Transfers of Interests in Contracts . . . . . . . . . . . . . . . . . 35
SECTION 2.4  Termination or Reduction of the Facility Limit. . . . . . . . . . . . 35
SECTION 2.5  Settlement Procedures . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.6  Payments and Computations, Etc. . . . . . . . . . . . . . . . . . . . 38
SECTION 2.7  Yield Protection. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 2.8  Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 2.9  Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 2.10 Broken Funding. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 2.11 Inability to Determine Eurodollar Rate. . . . . . . . . . . . . . . . 45
SECTION 2.12 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 2.13 Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 2.14 Collection Account. . . . . . . . . . . . . . . . . . . . . . . . . . 48

                                     ARTICLE III

CONDITIONS OF PURCHASES; OPTIONAL SALES. . . . . . . . . . . . . . . . . . . . . . 50
SECTION 3.1  Conditions Precedent to Initial Purchase. . . . . . . . . . . . . . . 50
SECTION 3.2  Conditions Precedent to All Purchases . . . . . . . . . . . . . . . . 51
SECTION 3.3  Optional Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 3.4  Optional Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . 55

                                      ARTICLE IV

REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 56


                                       i
<PAGE>

SECTION 4.1  Representations and Warranties of the Seller. . . . . . . . . . . . . 56
SECTION 4.2  Representations and Warranties of the Servicer. . . . . . . . . . . . 61

                                      ARTICLE V

GENERAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 5.1  Affirmative Covenants of the Seller . . . . . . . . . . . . . . . . . 64
SECTION 5.2  Reporting Requirements of the Seller. . . . . . . . . . . . . . . . . 68
SECTION 5.3  Negative Covenants of the Seller. . . . . . . . . . . . . . . . . . . 69
SECTION 5.4  Covenants of the Servicer . . . . . . . . . . . . . . . . . . . . . . 71

                                      ARTICLE VI

ADMINISTRATION AND COLLECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 6.1  Retention and Termination of Servicer . . . . . . . . . . . . . . . . 79
SECTION 6.2  Duties of the Servicer. . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 6.3  Rights of the Funding Agent . . . . . . . . . . . . . . . . . . . . . 82
SECTION 6.4  Responsibilities of the Seller. . . . . . . . . . . . . . . . . . . . 83
SECTION 6.5  Further Action Evidencing Purchases . . . . . . . . . . . . . . . . . 83
SECTION 6.6  Application of Payments . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 6.7  Consequences of a Servicer Termination Event. . . . . . . . . . . . . 84
SECTION 6.8  Appointment of Successor. . . . . . . . . . . . . . . . . . . . . . . 85

                                     ARTICLE VII

TERMINATION EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 7.1  Termination Events. . . . . . . . . . . . . . . . . . . . . . . . . . 87

                                     ARTICLE VIII

INDEMNIFICATION; REPURCHASES . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

SECTION 8.1  Indemnities by the Seller . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 8.2  Repurchase of Receivables . . . . . . . . . . . . . . . . . . . . . . 93

                                      ARTICLE IX

MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96


                                       ii
<PAGE>

SECTION 9.1  Amendments, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 9.2  Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 9.3  No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 9.4  Binding Effect; Assignability . . . . . . . . . . . . . . . . . . . . 98
SECTION 9.5  Governing Law; Waiver of Jury Trial . . . . . . . . . . . . . . . . . 99
SECTION 9.6  Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 9.7  No Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . .100
SECTION 9.8  Execution in Counterparts; Severability . . . . . . . . . . . . . . .101
SECTION 9.9  Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . .101
SECTION 9.10 Limited Recourse to PARCO . . . . . . . . . . . . . . . . . . . . . .102
SECTION 9.11 Waiver of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . .103
SECTION 9.12 Conflict Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . .103
SECTION 9.13 Liabilities and Rights of Funding Agent . . . . . . . . . . . . . . .103
SECTION 9.14 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . .104


                                EXHIBITS AND SCHEDULES

EXHIBIT A    Form of Certificate
EXHIBIT B    Credit and Collection Policy
EXHIBIT C    [Reserved]
EXHIBIT D    Form of Interest Rate Hedge Assignment Acknowledgment
EXHIBIT E    Form of Monthly Report
EXHIBIT F    Form of Purchase Notice
EXHIBIT G    Servicer's Optional Sale Date Certificate
EXHIBIT H    List of Offices of Originator Where Records Kept
EXHIBIT I    List of the Lock-Box Bank

Schedule I   Accountant's Procedures Letter
</TABLE>


                                      iii
<PAGE>

                           RECEIVABLES TRANSFER AGREEMENT
                            Dated as of October 16, 1998


          ARCADIA RECEIVABLES FINANCE CORP. V, a Delaware corporation, as seller
(together with its successors and assigns in such capacity, the "SELLER"),
ARCADIA FINANCIAL LTD., a Minnesota corporation, individually and as servicer
(together with its successors and assigns in such capacity, the "SERVICER"),
PARK AVENUE RECEIVABLES CORPORATION, a Delaware corporation, as purchaser
(together with its successors and assigns in such capacity, "PARCO"),  and THE
CHASE MANHATTAN BANK, a New York banking corporation, as back-up servicer (in
such capacity, the "BACK-UP SERVICER") and as funding agent for the benefit of
PARCO and the several APA Banks from time to time (together with its successors
and assigns in such capacity, the "FUNDING AGENT") hereby agree as follows:

                                PRELIMINARY STATEMENTS

          (1)  Certain terms which are capitalized and used throughout this
Agreement (in addition to those defined above) are defined in Article I of this
Agreement.

          (2)  The Originator or a Subsidiary of the Originator in its ordinary
course of business finances the cost of Financed Vehicles purchased by Obligors
or the Originator purchases Contracts with respect to Financed Vehicles from
Dealers;

          (3)  The Seller is a wholly-owned, special-purpose Subsidiary of the
Originator established to purchase or otherwise acquire Eligible Receivables and
Related Security;
                                           
          (4)  The Seller wishes from time to time to offer to sell to PARCO and
the APA Banks, as applicable, certain Eligible Receivables and Related Security;
and

          (5)  PARCO and the APA Banks, as applicable, desire to purchase such
Eligible Receivables and Related Security from the Seller, subject to the terms
and conditions of this Agreement;

          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as

<PAGE>

follows:

                                      ARTICLE I

                                     DEFINITIONS

          SECTION 1.1 CERTAIN DEFINED TERMS.   As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

          "ACCRUAL PERIOD" means, with respect to each Settlement Date (i) for
any Tranche funded based on a CP Rate, the immediately preceding Settlement
Period (or, in the case of the first Settlement Date, the period commencing on
the Initial Purchase Date and ending on the last day of the calendar month in
which the Initial Purchase Date occurs) and (ii) for any Tranche funded based on
a Base Rate or a Eurodollar Rate, initially the period from and including the
day on which such Tranche commences and ending on the day before such Settlement
Date and thereafter, with respect to such Tranche, the period from and including
the preceding Settlement Date and ending on such Settlement Date. 
Notwithstanding the foregoing, each Accrual Period to occur following the
Termination Date shall be of a duration selected by the Funding Agent in its
sole discretion.

          "ACTIVE BANKRUPT ACCOUNT BALANCE" means, as of the last day of any
Settlement Period, the aggregate Outstanding Balance of any Receivable
comprising the Servicing Portfolio with respect to which the Obligor is the
subject of any bankruptcy, insolvency, reorganization or similar proceeding.

          "ADVANCE PERCENTAGE" means 91%;  PROVIDED, that:  

          (a) (i) in the event the Net Yield as of the last day of any
Settlement Period is less than the Required Net Yield for such Settlement
Period, such percentage shall be decreased by an amount equal to the Weighted
Average Remaining Term at such time (expressed in years) MULTIPLIED BY the
amount by which such Required Net Yield exceeds such Net Yield, and (ii) in the
event the Net Yield as of the last day of any Settlement Period exceeds the
Required Net Yield for such Settlement Period, such percentage shall be
increased by an amount equal to the Weighted Average Remaining Term MULTIPLIED
BY the amount by which such Net Yield exceeds such Required Net Yield; and

          (b) (i) such percentage shall be decreased by 2%, in the event that
the

<PAGE>

long-term debt rating of AFL falls to B- by S&P or B3 by Moody's, and (ii)
if such percentage has been and remains decreased pursuant to the foregoing
clause (b)(i), such percentage shall be increased by 2%, in the event that the
long-term debt rating of AFL is greater than B- by S&P and greater than B3 by
Moody's; and

          (c) (i) such percentage shall be decreased by 2%, as of the last day
of any Settlement Period, in the event that the aggregate Outstanding Balance of
Receivables comprising the Servicing Portfolio with respect to which more than
$10 of any scheduled payment is more than thirty (30) days past due exceeds 6%
of the Servicing Portfolio Balance averaged for such Settlement Period and the
two immediately preceding Settlement Periods at such time, and (ii) if such
percentage has been and remains decreased pursuant to the foregoing clause
(c)(i), such percentage shall be increased by 2%, as of the last day of any
Settlement Period, in the event that the aggregate Outstanding Balance of
Receivables comprising the Servicing Portfolio with respect to which more than
$10 of any schedule payment is more than thirty (30) days past due is less than
or equal to 6% of the Servicing Portfolio Balance averaged for such Settlement
Period and the two immediately preceding Settlement Periods at such time; and

          (d) (i) such percentage shall be decreased by 2%, as of the last day
of any Settlement Period, in the event that the Monthly Extension Rate averaged
for such Settlement Period and the two immediately preceding Settlement Periods
exceeds 3.5%, and (ii) if such percentage has been and remains decreased
pursuant to the foregoing clause (d)(i), such percentage shall be increased by
2%, as of the last day of any Settlement Period, in the event that the Monthly
Extension Rate averaged for such Settlement Period and the two immediately
preceding Settlement Periods is less than or equal to 3.5%; and 

          (e) (i) such percentage shall be decreased by 2%, as of the last day
of any Settlement Period, in the event that the average for such Settlement
Period and the two immediately preceding Settlement Periods of the Active
Bankrupt Account Balance DIVIDED BY the Servicing Portfolio Balance exceeds
3.5%, and (ii) if such percentage has been and remains decreased pursuant to the
foregoing clause (e)(i), such percentage shall be increased by 2%, as of the
last day of any Settlement Period, in the event that the average for such
Settlement Period and the two immediately preceding Settlement Periods of the
Active Bankrupt Account Balance DIVIDED BY the Servicing Portfolio Balance is
less than or equal to 3.5%; PROVIDED, FURTHER, that in no event shall the
Advance Percentage exceed 91%.  The Advance Percentage shall be calculated based
on the most recent Monthly Report received by the Funding Agent.

<PAGE>

Notwithstanding any of the foregoing, any adjustment to the Advance Percentage
shall not be effective until the next Settlement Date, except as specified in
Section 2.2(c).

          "AFFECTED PARTY" means PARCO, each APA Bank, Chase, individually and
in its capacity as Funding Agent, the Back-Up Servicer and each of their
respective Affiliates and assigns.

          "AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with such Person (excluding any trustee under, or any committee with
responsibility for administering, any employee benefit plan).  A Person shall be
deemed to be controlled by any other Person if such other Person controls such
Person within the meaning of Section 15 of the Securities Act of 1933, as
amended, or Section 20 or the Securities Exchange Act of 1934, as amended.

          "AFL" means Arcadia Financial Ltd., a Delaware corporation, and its
successors and assigns.

          "AGGREGATE COMMITMENT" has the meaning specified in the Asset Purchase
Agreement.

          "AGGREGATE UNPAIDS" means, at any time, an amount equal to the sum of
(i) the aggregate accrued and unpaid Discount with respect to all Tranche
Periods at such time, (ii) the Net Investment at such time, and (iii) all fees
and other amounts owed (whether due or accrued) hereunder or under the Fee
Letter by the Seller or AFL to PARCO or the APA Banks at such time.

          "AGREEMENT" means this Receivables Transfer Agreement, as amended,
supplemented or otherwise modified and in effect from time to time pursuant to
the terms hereof.

          "APA BANK" means any of the several financial institutions named as
such in the Asset Purchase Agreement.

          "ASSET PURCHASE AGREEMENT" means that certain Asset Purchase
Agreement, dated as of October 16, 1998, by and among PARCO, the Funding Agent
and the several APA Banks party thereto from time to time, as the same may be
amended, supplemented or otherwise modified and in effect from time to time.

          "ASSIGNEE RATE" for any Accrual Period and any Tranche funded by a APA
Bank means an interest rate per annum equal to the applicable Eurodollar Rate;
PROVIDED,  HOWEVER, that (i) in the case of any Tranche which commences earlier
than the third (3rd) Business Day after the related APA Banks have been notified
thereof, then the "Assignee Rate" shall be the average of the applicable Base
Rates for each 

<PAGE>

day during such Accrual Period prior to the applicable Eurodollar Rate taking
effect; (ii) if the Funding Agent notifies the Seller of the unavailability or
unsuitability of the Eurodollar Rate in accordance with Section 2.11 hereof, the
"Assignee Rate" shall be the average of the applicable Base Rates for each day
during such Accrual Period that the Tranche Rate is determined by reference to
the Base Rate; and (iii) following the occurrence of an Termination Event, the
"Assignee Rate" for each Tranche shall be the average of the applicable Base
Rate PLUS 2% per annum for each day during such Accrual Period that such
post-termination Base Rate is in effect.

          "BACK-UP SERVICER" means Chase, as back-up servicer, and its
successors and assigns in such capacity.

          "BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C.
Section 101 ET SEQ), as amended and in effect from time to time, or any
successor statute.

          "BASE RATE" means a rate per annum equal to the greater of (i) the
prime rate of interest announced by the Funding Agent from time to time,
changing when and as said prime rate changes (such rate not necessarily being
the lowest or best rate charged by the Funding Agent) and (ii) the sum of (a)
0.50% and (b) the rate equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions received
by the Funding Agent from three (3) Federal funds brokers of recognized standing
selected by it.

          "BENEFIT PLAN" means a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which the Seller
or any ERISA Affiliate is, or at any time within the immediately preceding six
(6) years was, an "employer" as defined in Section 3(5) of ERISA.

          "BLENDED HEDGE RATE" means, as of the related Settlement Date, a  per
annum rate equal to the weighted average of the rates payable by the Seller
under Interest Rate Hedges then in effect and the lower of (i) the "strike
rates" under Interest Rate Hedges then in effect which are caps or (ii) the
weighted average of the Tranche Rates then in effect.

          "BR TRANCHE" means a Tranche as to which Discount is calculated at 
<PAGE>

the Base Rate.

          "BUSINESS DAY" means any day excluding Saturday, Sunday and any day on
which banks in The City of New York, New York or Minneapolis, Minnesota are
authorized or required by law to close, and, when used with respect to the
determination of any Eurodollar Rate or any notice with respect thereto, any
such day which is also a day for trading by and between banks in United States
dollar deposits in the London interbank market.

          "CARRYING COSTS" means the costs and expenses specified in Sections
2.5(c)(iii)-(c)(vii) and (c)(xii)-(c)(xiv).

          "CERTIFICATE" means a certificate in substantially the form of Exhibit
A hereto, which evidences the ownership interest of PARCO or the APA Banks, as
applicable, and their respective assignees in the Purchased Assets.

          "CHARGED-OFF RECEIVABLE" means any Receivable which has been
written-off  in accordance with the Credit and Collection Policy.

          "CHASE" means The Chase Manhattan Bank, a New York banking
corporation, and its successors and assigns.

          "CHASE ROLES" has the meaning specified in Section 9.12.

          "COLLECTION ACCOUNT" has the meaning set forth in Section 2.14(a).

          "COLLECTIONS" means with respect to each Purchased Receivable, without
limitation, all (i) payments received and collected on such Purchased
Receivable, if any, theretofore required to be remitted by the Servicer to the
Collection Account with respect to such Purchased Receivable, (ii) net proceeds
received by virtue of the liquidation of such Purchased Receivable, (iii)
retained proceeds received under any property damage, casualty or other
insurance policy with respect to such Purchased Receivable, (iv) interest of the
Seller in any property damage, casualty or other insurance policies as the same
relate to the Financed Vehicle securing such Purchased Receivable and (v) other
proceeds relating to such Purchased Receivable or its Contract File, including,
but not limited to, amounts received under any Interest Rate Hedge, Recoveries,
Repurchase Proceeds and amounts from withdrawals from the Reserve Account.

          "COMMERCIAL PAPER" means the short-term promissory notes of PARCO
issued by PARCO in the commercial paper market.

          "COMMITMENT EXPIRY DATE" has the meaning specified in the Asset
Purchase Agreement.

<PAGE>

          "CONTRACT" means, with respect to each Receivable, the note, retail
sales installment contract or any other instrument, agreement, invoice or other
writing evidencing the Obligor's obligation to repay Indebtedness to the
Originator.

          "CONTRACT FILE" means, with respect to each Receivable, the original
Contract, the original credit application or a copy thereof (fully executed on
the Servicer's customary form or a form approved by the Servicer), either a copy
of the application to the appropriate state authorities for a Title to the
related Financed Vehicle or a standard assurance in the form commonly used in
the industry relating to the provision of Title and when issued by the
appropriate state authorities, the related Title (but only to the extent that
Title documents are required under applicable state law to be held by a secured
party in order to perfect such secured party's security interest in the related
Financed Vehicle) or, for 180 days after the date of such Contract, in lieu of
the related Title, a letter from the applicable Dealer binding such Dealer
unconditionally to repurchase the related Receivable and/or Contract if the
Title is not received by the Servicer within 180 days from the date of such
Contract, all original instruments (or copies thereof) modifying the terms and
conditions of the Contract and the original endorsements or assignments of such
Contract.

          "CP RATE" means, with respect to any Accrual Period during which the
Net Investment is funded by Commercial Paper relating to the Seller, the rate
equivalent to the rate (or, if more than one rate, the weighted average of the
rates) at which such Commercial Paper outstanding during such Accrual Period may
be sold by any placement agent or commercial paper dealer selected by PARCO,
which rates shall reflect and give effect to the commissions of placement agents
and dealers in respect of such promissory notes, to the extent such commissions
are allocated, in whole or in part, to such promissory notes by the Funding
Agent (on behalf of PARCO); PROVIDED, HOWEVER, that if the rate (or rates) as
agreed between any such agent or dealer and PARCO is a discount rate, then the
rate (or if more than one rate, the weighted average of the rates) resulting
from PARCO's converting such discount rate (or rates) to an interest-bearing
equivalent rate per annum.

          "CREDIT AND COLLECTION POLICY" means the Credit and Collection Policy
of the Originator for the Contracts and the Receivables attached as Exhibit B
hereto, as modified in compliance with Section 5.3(c) or Section 5.4(c)(ii)
hereto and Section 5.2(c) of the Receivables Purchase Agreement.

          "CREDIT SCORE" means, with respect to any Purchased Receivable, the

<PAGE>

applicable BEACON Score or any other credit score scale acceptable to the
Funding Agent and the Rating Agencies, as applicable.

          "CUTOFF DATE" means, with respect to any Purchased Receivable, the
date specified as the Cutoff Date in the related Purchase Notice.

           "DEALER" means any retail dealer of new or used automobiles,
light-duty trucks or minivans.

          "DEALER AGREEMENT" means an agreement between the Seller and any
Dealer as approved by the Funding Agent from time to time.

          "DEFAULTED RECEIVABLE" means a Receivable with respect to which: 
(i) in accordance with the Credit and Collection Policy, the Servicer has
determined that eventual payment in full is unlikely, (ii) the related Financed
Vehicle has been repossessed, or (iii) greater than $10 of any scheduled payment
is over sixty (60) days past the due date therefor.  A Receivable shall be
deemed to be a Defaulted Receivable upon the earliest to occur of the events
specified in clauses (i), (ii) and (iii) of the preceding sentence.

          "DELINQUENCY RATIO" means, as of the last day of any Settlement
Period, the average of the following ratio (expressed as a percentage) for such
Settlement Period and the two (2) immediately preceding Settlement Periods:  (i)
the sum of (A) aggregate Outstanding Balance of all Receivables comprising the
Servicing Portfolio which are Delinquent Receivables as of the last day of such
Settlement Period and (B) the remaining aggregate Outstanding Balance of all
Receivables comprising the Servicing Portfolio as of the last day of such
Settlement Period which do not constitute Defaulted Receivables and with respect
to which the related Financed Vehicle has been repossessed DIVIDED BY (ii) the
aggregate Outstanding Balance of all Receivables comprising the Servicing
Portfolio as of the last day of such Settlement Period.

          "DELINQUENT RECEIVABLE" means a Receivable with respect to which
greater than $10 of any payment thereon has remained unpaid more than thirty
(30) days past the due date therefor.

          "DEMAND NOTE" shall have the meaning specified in the Receivables
Purchase Agreement.

          "DETERMINATION DATE" means the 10th day of each calendar month;

<PAGE>

PROVIDED, that, if in any month such day is not a Business Day, the
"Determination Date" for such calendar month shall be the first Business Day to
occur after such 10th day.

          "DISCOUNT" means, with respect to any Tranche and any Settlement Date,
an amount equal to:

               [NI  X  TR  X  AD]
                ----------------

               [        YD      ]

     NI   =    the daily average of the Net Investment allocable to such Tranche
               during the related Accrual Period;

     TR   =    the Tranche Rate for such Tranche during the related Accrual
               Period;

     AD   =    the actual number of days elapsed during the related Accrual
               Period during which such Tranche was outstanding;

     YD   =    either (i) if the Tranche Rate is the CP Rate or the Eurodollar
               Rate, 360 or (ii) if the Tranche Rate is the Base Rate, 365 or
               366, as applicable; and

PROVIDED, HOWEVER, that (i) no provision of this Agreement shall require the
payment or permit the collection of Discount in excess of the maximum permitted
by applicable law and (ii) Discount shall not be considered paid by any
distribution if at any time such distribution is rescinded or must otherwise be
returned for any reason.

          "EFFECTIVE DATE" has the meaning specified in Section 3.1.

          "ELIGIBLE ACCOUNT" means either (i) a segregated trust account with
the trust department of a depository institution organized under the laws of the
United States of America or any state thereof or the District of Columbia (or
any domestic branch of a foreign bank), which institution is a "securities
intermediary" within the meaning of Section 8-102(14) of the UCC as in effect in
the State of New York and has a long-term deposit rating of at least Baa3 by
Moody's, having trust powers and acting as trustee for funds deposited in such
account, or (ii) a segregated deposit account with a depository institution
organized under the laws of the United States of America or any state thereof
(or any domestic branch of a foreign bank), which institution is a "securities
intermediary" within the meaning of Section 8-102(14) of the UCC as in effect in
the State of New York and has long-term deposit obligations which are rated Aa3
or higher by Moody's and has short-term debt obligations which are rated "A-1"
by S&P and "P-1" by Moody's.

<PAGE>

          "ELIGIBLE RECEIVABLE" means, at any time of determination, any
Receivable which satisfies the following:

          (i)      which Receivable  (A) was originated in the United States by
a Dealer, the Originator or a Subsidiary of the Originator for the retail sale
of a Financed Vehicle in the ordinary course of such Person's business, which
Person had all licenses and permits necessary to originate Receivables in the
jurisdiction where such Person is located, (B) arose pursuant to a Contract
which was fully and properly executed by the parties thereto (C) was purchased
from the Dealer (unless such Receivable was originated by the Originator or a
Subsidiary of the Originator) by the Originator or a Subsidiary of the
Originator under a Dealer Agreement existing and enforceable at the time of the
origination of the related Receivable, which Dealer Agreement contains no clause
restricting its assignability in any way, and (D) if originated by a Subsidiary
of the Originator, was validly sold and assigned to the Originator by such
Subsidiary; 

          (ii)     related to which there exists a valid, subsisting and
enforceable first priority perfected security interest in favor of AFL in the
related Financed Vehicle (which security interest has been assigned to the
Seller and is validly assignable by the Seller to the Funding Agent on behalf of
PARCO and the APA Banks); 

          (iii)    with respect to which the related Contract contains customary
and enforceable provisions so as to render the rights and remedies of the holder
thereof against the property subject to such Contract adequate for the
realization of the benefits of the security provided thereby, including all the
rights of a secured party under the UCC in effect in the jurisdiction in which
the related Obligor resides or such Contract was executed; 

          (iv)     the Contract related to which provides for level monthly
payments (PROVIDED that the payment in the first or last month in the life of
the Receivable may be minimally different from the level payment) that fully
amortize the amount financed over the original contractual term and yield
interest at the annual percentage rate; 

          (v)      the Contract related to which provides for, in the event such
Contract is prepaid, a prepayment that fully pays the principal balance and
includes accrued but unpaid interest through the date of prepayment calculated
at a rate at least equal to the annual percentage rate specified in such
Contract;

<PAGE>

          (vi)     the Contract (or any provision thereof) related to which has
not been waived, amended or rewritten or amounts due and owing with respect
thereto deferred or waived except in accordance with the Credit and Collection
Policy and/or the following guidelines (such guidelines, the "ADDITIONAL CREDIT
GUIDELINES"): (A) the waiver of any prepayment charge, late payment charge or
any other similar fees that may be collected in the ordinary course of servicing
such Contract, (B) a modification of or amendment to such Contract in order to
change the Obligor's regular due date to a date within the Settlement Period in
which such due date occurs, reamortize the scheduled payments on such Contract
following a partial prepayment of principal and grant extensions on such
Contract, provided that the monthly payments on such Contract shall not have
been extended more than two times in any twelve-month period, and provided
further that the aggregate period of all extensions on such Contract shall not
have exceeded six months, and (C) subject to the foregoing clause (B), the
granting of payment extensions or deferrals on, or other modifications or
amendments to, such Contract in accordance with customary procedures of the
Servicer if the Servicer believes in good faith that such extension, deferral,
modification or amendment is necessary to avoid  a default on such Contract,
will maximize the amount to be received by PARCO and/or the APA Banks with
respect to such Contract, and is otherwise in the best interests of PARCO and/or
the APA Banks.

          (vii)    which does not, at the time of the initial creation of an
interest of PARCO and/or the APA Banks therein, constitute a Defaulted
Receivable or a Delinquent Receivable;

          (viii)   which, together with the related Contract, does not
contravene applicable laws, rules or regulations including, without limitation,
laws, rules or regulations concerning such matters as usury, consumer
protection, truth in lending, fair credit billing and equal credit opportunity;

          (ix)     which, if originated by a Dealer, was sold by such Dealer to
the Originator without any fraud or misrepresentation by the Dealer;

          (x)      which, together with the related Contract, represents the
genuine, legal, valid and binding payment obligation in writing of the Obligor,
enforceable in accordance with its terms (except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity),
and all parties to the related Contract had full legal capacity to execute and
deliver such 

<PAGE>

Contract and all other documents related thereto and to grant the security
interest purported to be granted thereby;

          (xi)     the Obligor of which is not the United States of America or
any state or local government or territory or any agency, department or
instrumentality thereof;

          (xii)    with respect to which no Obligor had been identified on the
records of the Originator, the Seller or the Servicer as being the subject of a
bankruptcy, insolvency, reorganization or other similar proceeding;

          (xiii)   with respect to which the information set forth in the
related Purchase Notice was produced from the Servicer's electronic ledger and
was true and correct in all material respects on the related Cutoff Date.

          (xiv)    which (1) has a remaining maturity, as of the related Cutoff
Date, of not more than 72 months,  (2) has an original maturity of not more than
72 months,  (3) has a remaining principal balance as of the related Cutoff Date
of not more than $50,000, (4) is not more than 30 days past due as of the
related Cutoff Date, and (5) with respect to which no funds have been advanced
by the Originator, the Servicer or any Dealer, or anyone acting on behalf of any
of them in order to cause any Receivable to qualify under clause (4) above;

          (xv)     which, together with the Contract related thereto, has not
been satisfied, subordinated or rescinded, nor shall any Financed Vehicle or
other Related Security have been released from the security interests granted
under the related Contract in whole or in part;

          (xvi)    which, except for the security interests in favor of AFL, the
Seller and the Funding Agent, is free and clear of all security interests,
liens, charges, and encumbrances, and with respect to which no right of
rescission, setoff, counterclaim or defense shall have been asserted or
threatened;

          (xvii)   with respect to which no liens or claims have been filed for
work, labor or materials relating to a Financed Vehicle that will be prior to or
equal with the security interest in the Financed Vehicle which is the subject of
the related Contract;

          (xviii)  with respect to which there is no default, breach, violation
or event of acceleration existing under the related Contract, and there is no
event which, 

<PAGE>

with the passage of time, or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration;

          (xix)    with respect to which the related Obligor has, at the time of
the initial creation of an interest of PARCO and/or the APA Banks therein,
obtained physical damage and theft insurance covering the related Financed
Vehicle, and such Obligor is required under the terms of the related Contract to
maintain such insurance;

          (xx)     with respect to which, immediately prior to the sale pursuant
to this Agreement, the Seller has good and marketable title to such Receivable
free and clear of all liens, encumbrances, security interests and rights of
others, and the sale and assignment of such Receivable to the Seller by the
Originator has been perfected under the UCC;

          (xxi)    with respect to which there exists a Contract File which
contains, without limitation, each of the items described in the definition of
"Contract File" and is in the possession of the Servicer and with respect to
each document contained therein which is required to be executed by the related
Obligor has been executed by such Obligor in the appropriate spaces, all blanks
on any form have been properly filled in, and each form has otherwise been
correctly prepared in all material respects;
          
          (xxii)   which was not originated in, and is not subject to the laws
of, any jurisdiction under which the sale, transfer and assignment of such
Receivable is unlawful, void or voidable;

          (xxiii)  with respect to which all filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the Funding Agent
a first priority perfected security interest in the Receivables shall have been
made;

          (xxiv)   for which one, and only one, original executed copy of each
Contract exists;

          (xxv)    the Obligor of which is required to make payments to the 
Lock-Box;

          (xxvi)   which, together with the related Contract, constitutes
"chattel paper" under the UCC; and

          (xxviii) which is not the subject of a subvention program.

          "ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended and in effect from time to time, and any successor statute.

<PAGE>

          "ERISA AFFILIATE" means any (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the IRC) as the Seller; (ii) partnership or other trade or business (whether or
not incorporated) under common control (within the meaning of Section 414(c) of
the IRC) with the Seller or (iii) member of the same affiliated service group
(within the meaning of Section 414(m) of the IRC) as the Seller, any corporation
described in clause (i) above or any partnership or other trade or business
described in clause (ii) above.

           "EURODOLLAR RATE" means, with respect to any Tranche for which the
applicable rate is to be determined by reference to LIBOR, a rate which is 0.80%
in excess of a rate per annum equal to the sum (rounded upwards, if necessary,
to the next higher 1/100 of 1%) of (A) the rate obtained by dividing (i) the
applicable LIBOR by (ii) a percentage equal to 100% MINUS the reserve percentage
used for determining the maximum reserve requirement as specified in Regulation
D of the Board of Governors of the Federal Reserve System (including, without
limitation, any marginal, emergency, supplemental, special or other reserves)
that is applicable to the Funding Agent during the related Accrual Period in
respect of eurocurrency or eurodollar funding, lending or liabilities (or, if
more than one percentage shall be so applicable, the daily average of such
percentage for those days in the related Accrual Period during which any such
percentage shall be applicable) PLUS (B) the then daily net annual assessment
rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) as estimated by
the Funding Agent for determining the current annual assessment payable by the
Funding Agent to the Federal Deposit Insurance Corporation in respect of
eurocurrency or eurodollar funding, lending or liabilities.

          "EURODOLLAR TRANCHE" means a Tranche as to which Discount is
calculated at a Eurodollar Rate.

          "EVENT OF BANKRUPTCY" shall mean, with respect to any Person, (i) that
such Person (a) shall generally not pay its debts as such debts become due or
(b) shall admit in writing its inability to pay its debts generally or (c) shall
make a general assignment for the benefit of creditors; (ii) any proceeding
shall be instituted by or against such Person seeking to adjudicate it as
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or any substantial part of
its property or (iii) if such Person is a corporation, such Person or 

<PAGE>

any Subsidiary shall take any corporate action to authorize any of the actions
set forth in the preceding clauses (i) or (ii).

          "FACILITY DOCUMENTS" means collectively, this Agreement, the Lock-Box
Agreement, the Receivables Purchase Agreement, the Certificate, the Demand Note,
the Fee Letter, the Asset Purchase Agreement and all other agreements, documents
and instruments delivered pursuant thereto or in connection therewith.

          "FACILITY LIMIT" means, at any time, $150,000,000; PROVIDED, HOWEVER,
that at all times on and after the Termination Date, the "Facility Limit" means
the aggregate outstanding Net Investment.   The Facility Limit may also be
reduced pursuant to Section 2.4.

          "FEE LETTER" means the letter agreement of even date herewith between
the Seller and the Funding Agent.

          "FINAL COLLECTION DATE" means the date following the Termination Date
on which the aggregate outstanding Net Investment has been reduced to zero and
PARCO and the APA Banks have received all Discount (including, without
limitation, all amounts accrued under clause (ii) of the definition of "Assignee
Rate") and other amounts payable to PARCO, the APA Banks and the Funding Agent
under this Agreement or any other agreement executed pursuant hereto.

          "FINAL TERMINATION DATE" means October 15, 1999, as such time may be
extended for an additional 364 days from time to time in accordance with Section
9.1(b).

          "FINANCE CHARGE COLLECTIONS" means, for any Settlement Period, the
aggregate amount of Collections (other than Principal Collections) received
during such Settlement Period, including, without limitation, all amounts paid
by or on behalf of Obligors with respect to interest, finance charges, late
payment charges, fees, and any other amounts due under the Contracts relating to
the Purchased Receivables (other than with respect to the unpaid principal
balance thereof) .

          "FINANCED VEHICLE" means the new or used automobile, minivan or
light-duty truck that is purchased by the Obligor to which a particular
Receivable relates.

          "FORCE-PLACED INSURANCE" has the meaning specified in Section 6.9.

          "FUNDING AGENT" has the meaning set forth in the preamble to this
Agreement.

          "GAAP" means generally accepted accounting principles set forth in

<PAGE>

the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such accounting profession, which are in effect as of the date of
this Agreement.

          "HEDGE COUNTERPARTY" means any Person party to an Interest Rate Hedge
with the Seller.

          "INCREMENTAL PURCHASE" means any Purchase which, pursuant to Section
2.2, causes the aggregate outstanding Net Investment hereunder to increase.

          "INDEBTEDNESS" means, with respect to any Person, (i) indebtedness for
borrowed money (other than trade accounts payable incurred in the ordinary
course of business that do not bear interest if paid on or before the due date
thereof and which are not in fact overdue), (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with generally
accepted accounting principles, recorded as capital leases, and (v) obligations
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clauses (i) through (iv) above.

          "INDEMNIFIED AMOUNTS" has the meaning specified in Section 8.1(a).

          "INELIGIBLE PURCHASED RECEIVABLE" has the meaning specified in Section
8.2.

          "INITIAL PURCHASE DATE" means the date on which the first Purchase is
made pursuant to this Agreement.

          "INTEREST COLLECTIONS" means (A) the Collections and payments under
Interest Rate Hedges set aside for PARCO, the APA Banks and the Seller pursuant
to Section 2.5(b), (B) the Repurchase Proceeds, which, in the case of clauses
(A) and (B) above, constitute Finance Charge Collections, (C) Recoveries (to the
extent treated as Finance Charge Collections), (D) amounts from withdrawals from
the Reserve Account (to the extent treated as Finance Charge Collections), and
(E) all other Collections constituting or treated as Finance Charge Collections.

          "INTEREST RATE HEDGE" means any interest rate cap or other hedging

<PAGE>

mechanism which satisfies the requirements of Section 5.1(l).

          "INTEREST RATE HEDGE ASSIGNMENT ACKNOWLEDGMENT" means an
acknowledgment in substantially the form of Exhibit D hereto executed by a
counterparty to an Interest Rate Hedge (if other than Chase) in favor of the
Funding Agent.

          "INSURANCE ADD-ON AMOUNT" means the premium charged to the Obligor if
the Servicer obtains Force-Placed Insurance pursuant to Section 6.9

          "IRC" means the Internal Revenue Code of 1986, as amended.

          "LAW" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any Official Body.

          "LIBOR" means, with respect to any Tranche funded by the APA Banks and
not based on the Base Rate, for a specific Accrual Period, the rate for deposits
in United States dollars for a term equal to such Accrual Period (commencing on
the first day of such Accrual Period) which appears on Telerate Page 3750 as of
11:00 A.M. (London time) on the second Business Day prior to the commencement of
such Accrual Period.  If such rate does not appear on Telerate Page 3750, the
rate for such period shall be determined on the basis of the rates at which
deposits in United States dollars are offered by four (4) major banks in the
London interbank market, selected by the Funding Agent, at approximately 11:00
A.M. (London time) on such date to prime banks in the London interbank market
for a period equal to such Accrual Period (commencing on the first day of the
Accrual Period).  The Funding Agent shall request the principal London office of
each such bank to provide a quotation of its rate.  If at least two (2) such
quotations are provided, the rate for such Accrual Period shall be the
arithmetic mean of the quotations.  If fewer than two quotations are provided as
requested, the rate for such Accrual Period shall be the arithmetic mean of the
rates quoted by four (4) major banks in The City of New York, selected by the
Funding Agent, at approximately 11:00 A.M. (New York time) on the first day of
such Accrual Period for loans in United States dollars to leading European banks
for a period equal to such Accrual Period (commencing on the first day of such
Accrual Period).  If at least two (2) such quotations are provided, the rate for
such Accrual Period shall be the arithmetic mean of the quotations.  If fewer
than two (2) quotations are provided as requested, the rate for such Accrual
Period shall be the LIBOR rate for the immediately preceding Accrual Period.

          "LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority or other security

<PAGE>

agreement or preferential arrangement of any kind or nature whatsoever in
respect of any property of a Person, whether granted voluntarily or imposed by
law, and includes the interest of a lessor under a capital lease or under any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement or similar notice (other
than a financing statement filed by a "true" lessor or consignor pursuant to
Section 9-408 of the UCC), naming the owner of such property as debtor, under
the UCC or other comparable law of any jurisdiction.

          "LOCK-BOX" means the "Lockbox", together with the "Agent Account",
each as defined in the Lock-Box Agreement.

          "LOCK-BOX ACCOUNT" means that certain bank account held at Harris
Trust and Savings Bank in the name, and under the sole dominion and control of, 
The Chase Manhattan Bank, as Funding Agent for the benefit of PARCO and the APA
Banks, as Account No. 1474709, or any successor account designated by the
Funding Agent from time to time.

          "LOCK-BOX AGREEMENT" means the Agency Agreement, dated as of November
13, 1992 by and among Harris Trust and Savings Bank, AFL, Shawmut Bank, N.A., as
Trustee, Saturn Financial Services, Inc. and the Program Parties (as defined
therein), taken together with the Retail Lockbox Agreement, dated as of November
13, 1992, among such parties, and the Counterpart to Agency Agreement and Retail
Lockbox Agreement, dated as of the date hereof, among Harris Trust and Savings
Bank, AFL, the Seller and the Funding Agent, as such agreements may be amended,
supplemented or otherwise modified and in effect from time to time, unless such
agreement shall be terminated in accordance with its terms, in which event
"Lock-Box Agreement" shall mean such other agreement, in form and substance
acceptable to the Funding Agent, among the Servicer, the Seller, the Funding
Agent and the Lock-Box Bank.

          "LOCK-BOX BANK" means Harris Trust and Savings Bank, and its
successors and assigns; PROVIDED, that any such successor and assign shall be
acceptable to the Funding Agent.

          "LTV" means the ratio, expressed as a percentage, the numerator of
which is the amount financed under any Contract (excluding Soft-Adds), and the
denominator of which is the retail value of the related Financed Vehicle as of
the date of such Contract, as listed on the applicable Dealer's invoice, the
NADA Used Car Guide, the National Auto Research Black Book or the Kelley Blue
Book, as applicable.

<PAGE>

          "MAXIMUM INTEREST RATE CAP STRIKE PRICE" means, with respect to any
Purchase Date, a per annum rate equal to the Weighted Average Coupon MINUS
10.15%.

          "MINIMUM RESERVE ACCOUNT BALANCE" means an amount equal to $200,000.

          "MONTHLY EXTENSION RATE" means, for any Settlement Period, a fraction
expressed as a percentage, the numerator of which is the aggregate Outstanding
Balance, as of the last day of such Settlement Period, of  all Receivables
comprising the Servicing Portfolio with respect to which the scheduled payments
relating thereto were extended during such Settlement Period, and the
denominator of which is the Servicing Portfolio Balance as of the last day of
such Settlement Period.

          "MONTHLY REPORT" means a report, in substantially the form of Exhibit
E hereto, furnished by the Servicer to the Funding Agent for the benefit of
PARCO and the APA Banks pursuant to Section 2.5(a).

          "MOODY'S" means Moody's Investors Service, Inc., and its successors
and assigns.

          "MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either the Seller or any ERISA Affiliate.

          "NET CREDIT LOSSES"  means, with respect to any Settlement Period, the
Outstanding Balance of Receivables comprising the Servicing Portfolio (without
duplication, net of Recoveries received by the Servicer) which became
Charged-Off Receivables during such Settlement Period, calculated in a manner
consistent with the calculations of net losses in Arcadia's Annual Report filed
with the Securities and Exchange Commission on Form 10-K for the year ended
December 31, 1997.

          "NET CREDIT LOSS RATIO" means, as of any Determination Date, a
fraction, expressed as a percentage, the numerator of which equals the product
of two and the Net Credit Losses for the six preceding Settlement Periods and
the denominator of which equals the average of the Servicing Portfolio Balance
for the seven preceding Settlement Periods.  The calculation of "Net Credit Loss
Ratio" shall not include the June 1998 Settlement Period.

          "NET INVESTMENT" means the sum of the amounts paid by PARCO and 

<PAGE>

the APA Banks, as applicable, to the Seller for each Incremental Purchase
pursuant to Section 2.2, as reduced from time to time by Collections received
and distributed on account of such Net Investment pursuant to Section 2.5.  If
PARCO or an APA Bank is required (or believes in good faith that it is required)
by law to repay (as a preference or otherwise, to the Seller, the Originator, an
Obligor, a trustee for the Seller, the originator or any Obligor, a court or any
other Person) any amount which previously caused a reduction in Net Investment,
then the Net Investment shall be reinstated by the amount of such repayment, and
the Seller will indemnify and hold PARCO, the APA Banks or the Funding Agent, as
applicable, harmless for the amount of such repayment, interest thereon required
(or believed in good faith by PARCO, the APA Banks or the Funding Agent, as
applicable, to be required) to be paid in connection therewith and all losses,
liabilities, costs and expenses related thereto (including but not limited to
reasonable attorneys' fees and expenses).

          "NET POOL BALANCE" means, at any time, the sum of (i) the aggregate
Outstanding Balance of all Purchased Receivables which constitute Eligible
Receivables as of the last day of the immediately preceding Settlement Period
PLUS (ii) the aggregate balance of Principal Collections on deposit in the
Collection Account at such time PLUS (iii) amounts on deposit in the Lock-Box
Account attributable to the Purchased Receivables; PROVIDED that the Net Pool
Balance shall not include the Outstanding Balance of (i) any Defaulted
Receivable, (ii) any Delinquent Receivable, (iii) any Receivable which is the
subject of a Repurchase Obligation, and (iv) any Receivable which has a
remaining principal balance greater than $40,000 to the extent such balance,
when taken together with the remaining principal balances of all other such
Receivables, exceeds 2% of the aggregate Outstanding Balance of all Purchased
Receivables.

          "NET YIELD" means the Weighted Average Coupon of the Outstanding
Balance of Purchased Receivables as of the last day of any Settlement Period
MINUS the sum of (i) the Blended Hedge Rate, (ii) the LIBOR margin of 0.80%,
(iii) the Servicing Fee Percentage and (iv) 0.10%.

          "OBLIGOR" means the obligor and any co-obligor(s) under a Receivable.

          "OFFICIAL BODY" shall mean any government or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

          "OPTIONAL SALE" has the meaning assigned to that term in Section 3.3.

          "OPTIONAL SALE DATE" means any day on which an Optional Sale is
designated pursuant to Section 3.3.

<PAGE>

          "OPTIONAL SALE RELATED COLLATERAL" shall mean, with respect to any
Optional Sale, all or a portion of the Purchased Assets selected by the Seller
in connection with the Optional Sale in accordance with the FIFO method
(excluding, however, any Purchased Receivable and Related Security subject to a
Repurchase Obligation and Purchased Receivables and Related Security which are
not included in the Net Pool Balance), as the Seller has agreed to sell in an
arm's-length transaction permitted hereby and as are designated by the Seller
and specified in the Servicer's Optional Sale Date Certificate.

          "ORIGINATOR" means Arcadia Financial Ltd., a Delaware corporation, and
its successors and assigns in such capacity.

          "OTHER COSTS" has the meaning specified in Section 9.6(c).

          "OTHER SELLER" means any Person, other than the Seller, that has
entered into a receivables purchase agreement, receivables transfer agreement,
loan agreement or funding agreement with PARCO.

          "OUTSTANDING BALANCE" means, with respect to any date and any
Receivable, the then outstanding principal balance of such Receivable.  For the
avoidance of doubt, it is understood that in no event shall the definition of
"Outstanding Balance" include any amount in respect of (i) finance charges and
income with respect to any such Receivable or (ii) prepaid dealer reserves or
other marketing expenses with respect to any such Receivable.

          "PARCO" has the meaning set forth in the preamble to this Agreement.

          "PERMITTED INVESTMENT" means any one or more of the following types of
investments:

          (a) (i) direct interest-bearing obligations of, and interest-bearing
obligations guaranteed as to timely payment of principal and interest by, the
United States or any agency or instrumentality of the United States, the
obligations of which are backed by the full faith and credit of the United
States; and (ii) direct interest-bearing obligations of, and interest-bearing
obligations guaranteed as to timely payment of principal and interest by, the
Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation, but only if, at the time of investment, such obligations are
assigned the highest credit rating by each Rating Agency;

<PAGE>

          (b) demand or time deposits in, certificates of deposit of, or
bankers' acceptances issued by any depository institution or trust company
organized under the laws of the United States or any State thereof and subject
to supervision and examination by federal and/or state banking authorities
(including, if applicable, the Funding Agent or any agent thereof acting in its
commercial capacity); provided that the short-term unsecured debt obligations of
such depository institution or trust company at the time of such investment, or
contractual commitment providing for such investment, are assigned the highest
credit rating by each Rating Agency;

          (c) repurchase obligations pursuant to a written agreement (i) with
respect to any obligation described in clause (a) above, where the Funding Agent
has taken actual or constructive delivery of such obligation, and (ii) entered
into with the corporate trust department of a depository institution or trust
company organized under the laws of the United States or any State thereof, the
deposits of which are insured by the Federal Deposit Insurance Corporation and
the short-term unsecured debt obligations of which are rated "A-1+" and "P-1" by
the Rating Agencies (including, if applicable, the Funding Agent or any agent
thereof acting in its commercial capacity);

          (d) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any State whose
long-term unsecured debt obligations are assigned the highest credit rating by
each Rating Agency at the time of such investment or contractual commitment
providing for such investment; PROVIDED, HOWEVER, that securities issued by any
particular corporation will not be Permitted Investments to the extent that an
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held in the Collection Account and the
Reserve Account to exceed 10% of the value Permitted Investments held in such
accounts (with Permitted Investments held in such accounts valued at par);

          (e) commercial paper that (i) is payable in United States dollars and
(ii) is rated in the highest credit rating category by each Rating Agency;

          (f) units of money market funds in the highest credit rating category
by each Rating Agency; or

          (g) any other demand or time deposit, obligation, security or
investment (including, without limitation, a hedging arrangement) as may be
acceptable to the Funding Agent, as evidenced by a writing to that effect, as
may from time to time be confirmed in writing to the Funding Agent.

PROVIDED that (i) Permitted Investments may be purchased by or through the
Funding Agent or any of its Affiliates and (ii) all Permitted Investments shall
be held in the 

<PAGE>

name of the Funding Agent.

          "PERMITTED SECURITIZATION TRANSACTION" means a transfer of Receivables
by way of a term securitization transaction or other type of refinancing.

          "PERMITTED ORIGINATOR TRANSACTION" means a transfer of Receivables by
way of a refinancing which is effected through a Subsidiary of the Originator.

          "PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture, government (or any agency or
political subdivision thereof) or other entity.

          "PLAN" means an employee benefit plan defined in Section 3(3) of ERISA
in respect of which the Seller or any ERISA Affiliate is, or within the
immediately preceding six years was, an "employer" as defined in Section 3(5) of
ERISA.

          "POOL BALANCE" means, on any date of determination, the aggregate
Outstanding Balance of all Purchased Receivables.

          "POTENTIAL TERMINATION EVENT" shall mean an event which, but for the
lapse of time or the giving of notice or both, would constitute a Termination
Event.

          "PRINCIPAL COLLECTIONS" means, for any Settlement Period, the
aggregate amount of Collections with respect to the unpaid principal balances
due under the Purchased Receivables received or deemed received during such
Settlement Period, together with, following the Termination Date, the aggregate
amount withdrawn from the Reserve Account and treated as Principal Collections
pursuant to Section 2.13(c).

          "PROGRAM FEE" has the meaning set forth in the Fee Letter.

          "PURCHASE" means a purchase of Purchased Receivables, Related Security
with respect to such Purchased Receivables and Collections with respect thereto
by PARCO and the APA Banks (acting through the Funding Agent), as applicable,
from the Seller pursuant to Sections 2.1 and 2.2.

          "PURCHASE DATE" means the Initial Purchase Date and, thereafter, any
Business Day of a calendar month on which a Purchase occurs; PROVIDED, that no
more than one Purchase may occur on any Purchase Date.

<PAGE>

          "PURCHASE NOTICE" means a notice, in substantially the form of Exhibit
F hereto, furnished by the Seller to the Funding Agent pursuant to Section 2.2.

          "PURCHASE PRICE" has the meaning specified in Section 2.2(c).

          "PURCHASE TERMINATION EVENT" has the meaning specified in the
Receivables Purchase Agreement.

          "PURCHASED ASSETS" means, at any time, all then outstanding Purchased
Receivables, Related Security with respect to such Purchased Receivables,
payments owing to the Seller or the Funding Agent (as applicable) under Interest
Rate Hedges covering Purchased Receivables and Collections with respect to, and
other proceeds of, such Purchased Receivables.

          "PURCHASED RECEIVABLE" means any Receivable which appears on any list
of Receivables at any time hereafter submitted to and accepted by the Funding
Agent, on behalf of and at the direction of PARCO or the APA Banks, as
applicable, pursuant to Section 2.2.  Once a Receivable appears on any such list
it shall remain a Purchased Receivable; PROVIDED, HOWEVER, that with respect to
any Receivable that is repurchased by the Seller pursuant to Section 8.2 or
Section 3.3, following the Funding Agent's receipt of the repurchase price for
such Receivable (and any other amounts due in connection therewith), "Purchased
Receivable" shall not include the Receivable so repurchased.

          "RATING AGENCIES" means S&P and Moody's.

          "RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given ten (10) days' (or such shorter period as
shall be acceptable to each Rating Agency) prior notice thereof and that each of
the Rating Agencies shall have notified the Seller, the Servicer and the Funding
Agent in writing that such action will not result in a reduction or withdrawal
of the then current rating of PARCO's Commercial Paper.

          "RECEIVABLES" means the indebtedness evidenced by the Contracts,
whether constituting accounts, general intangibles, contract rights, chattel
paper or instruments.

          "RECEIVABLES PURCHASE AGREEMENT" means that certain Receivables
Purchase Agreement, dated as of October 16, 1998, between the Originator and the
Seller, as the same may be amended, supplemented or otherwise modified and in
effect from time to time.

          "RECIPIENT" has the meaning specified in Section 2.12.

<PAGE>

          "RECORDS" means, with respect to each Purchased Receivable, all
factory invoices and work orders describing the related Financed Vehicle, the
bill of sale and guaranty of title, insurance policies, tax receipts, property
and casualty insurance policies or binders naming the Servicer as loss payee or
additional named insured, as is appropriate, insurance premium receipts, ledger
sheets, payment records, insurance claim files and correspondence, all
documentation in connection with any modification, release, accommodation,
co-signing or guaranty of the Purchased Receivable and all other documents and
instruments, including all books, records, files, tapes, correspondence and
other information or materials (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software and related
property and rights) relating to the Purchased Receivable, the Contract, the
Title and the Financed Vehicle relating to the Purchased Receivable and this
Agreement.

          "RECOVERIES" means, with respect to Receivables which constitute
Defaulted Receivables, all amounts representing recoveries on such Receivables
resulting from payments by any third party, the foreclosure upon, sale or other
disposition of the related Financed Vehicle, insurance proceeds with respect to
the related Financed Vehicle or payments made by or on behalf of the Obligor.

          "REFINANCING PROCEEDS" means proceeds received by the Seller pursuant
to a Permitted Securitization Transaction involving Purchased Receivables which
are concurrently repurchased by the Seller under Section 3.3.

          "RELATED SECURITY" means, with respect to any Receivable, all of the
Seller's right, title, and interest in, to and under (i) the related Contract
File, (ii) the related Financed Vehicle, (iii) all related Records, (iv) all
guarantees, insurance and other agreements or arrangements of whatever character
from time to time supporting or securing payment of such Receivable, whether
pursuant to the related Contract or otherwise, (v) all security interests, liens
and other property purporting to secure payment of the related Contract,
together with all financing statements signed by an Obligor and security
agreements describing any collateral securing such Contact, and (vi) all
proceeds of the foregoing.

          "REPURCHASE OBLIGATION" means, with respect to any Purchased
Receivable, any obligation of the Seller to purchase such Purchased Receivable
set forth in Section 8.2.

          "REPURCHASE PROCEEDS" means the amounts paid by the Seller in
connection with any repurchase of Purchased Receivables pursuant to Section 8.2

<PAGE>

hereof.

          "REQUIRED APA BANKS" means, on any date of determination, the APA
Banks whose commitments represent 66 2/3% of the Facility Limit.

          "REQUIRED NET YIELD" means, at any time, 8%.

          "RESERVE ACCOUNT" means that certain account as described in Section
2.13 hereof.

          "S&P" means Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc., and its successors and assigns.

          "SECTION 2.7 COSTS" has the meaning specified in Section 2.7.

          "SECURITIES" means any limited, general or other partnership interest,
or any stock, shares, voting trust certificates, bonds, debentures, notes or
other evidences of indebtedness, secured or unsecured, convertible, subordinated
or otherwise, or any certificates of interest, shares, or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire any of the foregoing.

          "SELLER" has the meaning set forth in the preamble to this Agreement.

          "SERVICER" means initially AFL and, thereafter, any successor
appointed pursuant to Article VI to service, administer and collect Purchased
Receivables.

          "SERVICER ADVANCE" has the meaning specified in Section 2.5(d).

          "SERVICER'S OPTIONAL SALE DATE CERTIFICATE" means an Officer's
Certificate of the Servicer substantially in the form of Exhibit G hereto.

          "SERVICER TERMINATION EVENT" means any of the following events shall
have occurred:

               (a)    The Servicer shall fail to make any payment or deposit to
be made by it hereunder and such failure is not due to a technical or similar
failure beyond the Servicer's control (and in no way related to the ability of
the Servicer to make such payment or deposit) which such technical or similar
failure has not been

<PAGE>

cured with one (1) Business Day; 

               (b)    The Servicer shall fail to perform or observe in any
material respect any other term, covenant or agreement contained in this
Agreement or any other Facility Document on its part to be performed or
observed, including failure to observe the Credit and Collection Policy and/or
the Additional Credit Guidelines;

               (c)    Any representation or warranty made or deemed to be made
by the Servicer (or any of its officers) under or in connection with this
Agreement or any other Facility Document, including any Monthly Report or any
Purchase Notice, shall prove to have been false or incorrect in any material
respect when made;

               (d)    An Event of Bankruptcy shall occur with respect to the
Servicer;

               (e)    A Termination Event shall occur and be continuing and the
Funding Agent has notified the Seller that a determination has been made that
the Servicer's ability to service the Purchased Receivables in accordance with
the terms of the Facility Documents has been impaired;

               (f)    The Servicer shall materially modify the Credit and
Collection Policy, unless it has given the Funding Agent timely notification of
such modification and the Funding Agent has determined in its reasonable
discretion that such modification is not a change which would be reasonably
likely to materially and adversely affect the interests of PARCO and APA Banks
hereunder; or

               (g)    Any event which is reasonably likely to materially and
adversely affect the ability of the Servicer to perform its duties and
obligations hereunder (including, but not limited to, the collection and
servicing of the Purchased Receivables).

          "SERVICING FEE" means a fee with respect to each Settlement Period,
payable to the Funding Agent in arrears for the account of the Servicer, equal
to the product of (i) the average daily Pool Balance during such Settlement
Period and (ii) the Servicing Fee Percentage.

          "SERVICING FEE PERCENTAGE" means 1.25% per annum or, if AFL is not the
Servicer, such higher percentage as the Funding Agent shall reasonably determine
in good faith to be the then current market rate payable to entities performing
duties and functions similar to those of the Servicer hereunder.

          "SERVICING PORTFOLIO" means all Receivables serviced by AFL 

<PAGE>

(whether or not then subject to this Agreement, a Permitted Securitization
Transaction or a Permitted Originator Transaction).

          "SERVICING PORTFOLIO BALANCE" means the aggregate Outstanding Balance
of all Receivables which comprise the Servicing Portfolio.

          "SETTLEMENT DATE" means the 15th day of each calendar month; PROVIDED,
that if in any month such day is not a Business Day, the "Settlement Date" for
such calendar month shall be the first Business Day to occur after such 15th
day. 

          "SETTLEMENT PERIOD" means a calendar month (except that the first
Settlement Period shall begin at the opening of business on the Effective Date
and shall end on the last day of the calendar month in which the Effective Date
occurs).

          "SOFT-ADDS" means those products which do not constitute the physical
portion of a Financed Vehicle, including, but not limited to, credit life and
disability insurance, vehicle extended warranty packages and vehicle servicing
packages.

          "SPECIAL CHARGE" means, with respect to any Person, any item, whether
cash or non-cash in nature, reported from time to time on the quarterly or
annual financial statements of such Person or otherwise, which is extraordinary,
unusual, or infrequent for purposes of GAAP and which is applied as a negative
charge against the net income of such Person (but not including charges due to
changes in accounting methods as prescribed by FASB and/or any other applicable
regulatory body).

          "SUBSIDIARY" means any corporation or other entity of which Securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other Persons performing similar functions are at the
time  directly or indirectly owned or controlled by such Person, one or more of
the other subsidiaries of such Person or any combination thereof.

          "TAXES" has the meaning assigned to that term in Section 2.9.

          "TERMINATION DATE" means the earliest of (i) the date of the reduction
of the Facility Limit to zero pursuant to Section 2.4 or the declaration or
automatic occurrence of the Termination Date pursuant to Section 7.1, (ii) five
(5) Business Days prior to the Commitment Expiry Date, and (iii) the Final
Termination Date. 

          "TERMINATION EVENT" has the meaning assigned to that term in Section

<PAGE>

7.1.

          "TITLE" means, with respect to each Receivable, the original
certificate of title or other instrument or registration evidencing ownership of
the related Financed Vehicle, which certificate, other instrument or
registration shall have the Lien of the Originator noted thereon or a UCC
financing statement signed by the Obligor and filed in the appropriate
jurisdiction evidencing the perfection of the Lien granted by the Obligor to the
Originator, assigned to the Seller under the Receivables Purchase Agreement and
assigned to the Funding Agent for the benefit of PARCO and the APA Banks (or its
designee) as provided herein.  In any jurisdiction in which the original
certificate of title is required to be given to the Obligor, the term "Title"
means only a certificate of notification issued to a secured party.

          "TRANCHE" means a portion of the Net Investment funded based on a
specific Tranche Rate pursuant to Article II of this Agreement.

          "TRANCHE RATE" means, for any Tranche and any Accrual Period, (i)
prior to the occurrence of a Wind-Down Event, the CP Rate and (ii) following the
occurrence of a Wind-Down Event, a rate equal to the applicable Assignee Rate
for such Tranche and related Accrual Period.

          "TRANSITION COSTS" means any documented expenses and allocated cost of
personnel reasonably incurred by a successor Servicer in connection with a
transfer of servicing from the Servicer to a successor Servicer pursuant to
Section 6.1 hereof.

          "UCC" means the Uniform Commercial Code as from time to time in effect
in the relevant jurisdiction.

          "WEIGHTED AVERAGE COUPON" means, as of the last day of any Settlement
Period, the weighted average of the per annum interest rates applicable to the
Purchased Receivables (other than Purchased Receivables that have been
charged-off) as of such last day.

          "WEIGHTED AVERAGE CREDIT SCORE" means, as of the last day of each
Settlement Period, the weighted average, by Outstanding Balance, of the Credit
Scores of all Purchased Receivables as of such last day.

          "WEIGHTED AVERAGE REMAINING TERM" means, at any time, a term
(calculated in years on an aggregate basis) equal to two (2) years. 

          "WIND-DOWN EVENT" means the occurrence of any of the following events:

<PAGE>

          (a)  PARCO, in its sole discretion, determines that it is unable or
               unwilling to issue Commercial Paper to fund the Net Investment or
               to make Purchases pursuant to Section 2.1(a);

          (b)  the providers of PARCO's liquidity and/or letter of credit
               facilities shall have given notice that an event of default has
               occurred and is continuing under their respective agreements with
               PARCO;

          (c)  on the fifth (5th) Business Day prior to the Commitment Expiry
               Date, the APA Banks shall have notified PARCO that their
               commitments will not be extended for an additional 364 days;

          (d)  PARCO's Commercial Paper shall not be rated at least A-1/P-1 by
               S&P and Moody's, respectively; and

          (e)  a Termination Event or a Potential Termination Event.

          "YEAR 2000 COMPLIANT" means, with regard to any Person, that all
software, embedded microchips, and other processing capabilities utilized by,
and material to the business or servicing operations or financial condition of
such Person, are able to interpret and manipulate data involving all calendar
dates correctly and without causing any abnormal ending scenario, including
dates in and after the Year 2000.

          SECTION 1.2 OTHER TERMS.  All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles.  All terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9.

          SECTION 1.3 COMPUTATION OF TIME PERIOD.  Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."

<PAGE>

                                      ARTICLE II

                          AMOUNTS AND TERMS OF THE PURCHASES

          SECTION 2.1 FACILITY. (a)  From the Effective Date to the Termination
Date, (i) prior to the occurrence of a Wind-Down Event, PARCO, acting through
the Funding Agent, may, in its sole discretion, make Purchases from the Seller
and (ii) following the occurrence of a Wind-Down Event, the APA Banks, acting
through the Funding Agent, shall make Purchases from the Seller on the terms and
conditions set forth herein.  Each such Purchase shall constitute an absolute
assignment and sale by the Seller, and a purchase and acquisition by PARCO or
the APA Banks, as applicable, of Purchased Assets, including, without
limitation, Purchased Receivables, Related Security and Collections with respect
thereto.  Under no circumstances shall PARCO or the APA Banks, as applicable,
make an Incremental Purchase, if, after giving effect to such Incremental
Purchase, the outstanding Net Investment hereunder would exceed the Facility
Limit.  Each Incremental Purchase shall be in a minimum amount of at least
$5,000,000.  Nothing in this Agreement shall be deemed to be or construed as a
commitment by PARCO to make Purchases at any time.

               (b)  It is the intention of the parties hereto that each Purchase
of Receivables, Related Security and Collections made hereunder shall constitute
a sale, which sale is absolute, irrevocable and without recourse except as
specifically provided herein and provide PARCO and the APA Banks, as applicable,
with the full benefits of ownership of the Purchased Receivables and such
related Purchased Assets.  Neither the Seller, the Funding Agent, PARCO nor the
APA Banks intend for the transactions contemplated hereunder to be, or for any
purpose to be characterized as, loans from PARCO or the APA Banks to the Seller
secured by such assets.  In addition, the Seller hereby pledges, grants a
security interest in and assigns to the Funding Agent, for the benefit of PARCO
and the APA Banks, as security for such loans and for the payment and
performance of all obligations of the Seller hereunder, all of the Seller's
right, title and interest in, to and under (i) the Purchased Receivables, the
Related Security and Collections related thereto, (ii) the Reserve Account, the
Collection Account, the Lock-Box and the Lock-Box Account and all funds and
investments on deposit therein and credited thereto, (iii) the Demand Note, (iv)
the Receivables Purchase Agreement, (v) Interest Rate Hedges and (vi) all
proceeds of the foregoing.  It is the intention of the parties hereto that the
Purchases of Purchased Receivables, Related Security and Collections made
hereunder shall constitute sales of such Purchased Receivables, Related Security
and Collections rather than a loan secured by such Purchased Receivables,
Related Security and Collections, and the Seller agrees to note, clearly and
unambiguously, on its financial statements and its electronic ledgers and other
applicable records that such Purchased Receivables, Related Security and
Collections have been sold to PARCO or the APA Banks, as applicable.

<PAGE>

          SECTION 2.2 MAKING PURCHASES.

               (a)    INCREMENTAL PURCHASES.  Each Incremental Purchase shall be
made on a Purchase Date upon delivery to the Funding Agent of a Purchase Notice
at least one Business Day prior such Purchase Date UNLESS any portion of
Discount with respect to the initial Tranche applicable to such Purchase is to
be calculated by reference to a Eurodollar Rate, in which case such notice must
be delivered to the Funding Agent by no later than 2:00 P.M. (New York time) on
the third (3rd) Business Day before such Purchase Date.  Each Purchase Notice
for an Incremental Purchase shall specify the amount of the proposed increase to
outstanding Net Investment as a result of such requested Incremental Purchase. 
Each Purchase Notice shall be in the form of Exhibit F hereto.

               (b)    EFFECT OF PAYMENT OF PURCHASE PRICE.  Upon the payment of
the Purchase Price for any Purchase, title to the Purchased Receivables
specified in the related Purchase Notice and the other Purchased Assets related
thereto shall vest in PARCO or the APA Banks, as applicable, whether or not the
conditions precedent to such Purchase were in fact satisfied; PROVIDED, HOWEVER,
that PARCO or the APA Banks, as applicable, shall not be deemed to have waived
any claim any of them may have under this Agreement for the failure by the
Seller in fact to satisfy any such condition precedent.  

               (c)    AGGREGATE PURCHASE PRICE; ADVANCE PERCENTAGE.  Each of
PARCO or each APA Bank, as applicable, shall pay to the Seller, through the
Funding Agent, its PRO RATA share of the increase in the Net Investment
attributable to each Incremental Purchase.  The Advance Percentage will be
calculated for each Purchase prior to the applicable Purchase Date.

          The amount of each Incremental Purchase shall be the amount requested
by the Seller in the related Purchase Notice; PROVIDED, that after giving effect
to such Incremental Purchase, the Net Investment shall not exceed the product of
the Advance Percentage and the Net Pool Balance (net of Principal Collections
held in the Collection Account and the Lock-Box Account at such time) (the
"PURCHASE PRICE"); PROVIDED FURTHER, that, if a Purchase occurs on a day which
is after the Determination Date related to any Settlement Period but prior to
the Settlement Date related to such Settlement Period, the Purchase Price shall
be the product of the Advance Percentage (adjusted according to the most
recently delivered Monthly Report or the most recently available information
regarding AFL's long-term debt rating) and the Outstanding Balance of
Receivables to become Purchased 

<PAGE>

Receivables on such date, and the immediately preceding proviso shall not be
applicable with respect to such Purchase.  On the date of each Incremental
Purchase, PARCO or each APA Bank, as applicable, shall, upon satisfaction of the
applicable conditions set forth in Article III, make available to the Funding
Agent at its address referred to in Section 2.6 its ratable portion, of the
aggregate amount of such Incremental Purchase in same day funds, and after
receipt by the Funding Agent of such funds, the Funding Agent will make such
funds immediately available to the Seller at Chase's address at 450 West 33rd
Street, New York, New York or as otherwise notified to the Funding Agent by the
Seller from time to time.  The ownership interest of PARCO or the APA Banks, as
applicable, in the Purchased Assets shall be evidenced by a Certificate executed
by the Seller and delivered to the Funding Agent.  After the Final Collection
Date has occurred, PARCO and each APA Bank shall, through the Funding Agent,
assign and sell to the Seller its respective remaining interest in the Purchased
Assets at par and any remaining Collections without any recourse, representation
or warranty, express or implied (other than a representation and warranty that
such Purchased Assets are free and clear of any Lien created by or through the
Funding Agent for the benefit of PARCO and the APA Banks ).

          SECTION 2.3 TRANSFERS OF INTERESTS IN CONTRACTS.  Except as expressly
set forth in this Agreement, neither the Funding Agent, PARCO nor any APA Bank
shall have any affirmative obligation or liability with respect to any Purchased
Receivables or related Contracts or any other Purchased Assets (including,
without limitation, any Interest Rate Hedges), nor shall any of them be
obligated to perform any of the affirmative obligations of the Seller or the
Originator thereunder.

          SECTION 2.4 TERMINATION OR REDUCTION OF THE FACILITY LIMIT.  The
Seller may, upon at least five (5) Business Days' written notice to the Funding
Agent, terminate in whole or reduce in part the unused portion of the Facility
Limit; PROVIDED, HOWEVER, that each partial reduction shall be in an amount
equal to  $1,000,000 or an integral multiple thereof.

          SECTION 2.5 SETTLEMENT PROCEDURES.

               (a)    MONTHLY REPORTS.  On or prior to each Determination Date,
the Servicer shall prepare and forward to the Funding Agent and the Back-Up
Servicer a Monthly Report substantially in the form of Exhibit E hereto;
PROVIDED, that the Servicer shall be deemed not to be in default with respect to
the foregoing requirement if such default is cured within one (1) Business Day.

<PAGE>

               (b)    RECEIPT OF COLLECTIONS AND INTEREST RATE HEDGE PAYMENTS. 
The Servicer shall cause all Collections of Purchased Receivables deposited in
(i) the Lock-Box to be transferred to the Lock-Box Account within one (1)
Business Day following receipt thereof into the Lock-Box and (ii) the Lock-Box
Account to be transferred to the Collection Account within two (2) Business Days
(or, after a Servicer Termination Event, one (1) Business Day) following receipt
thereof into the Lock-Box Account, and shall in no event later than two (2)
Business Days after such receipt (or, after a Servicer Termination Event, one
(1) Business Day) transfer any and all Collections of Purchased Receivables
received by the Servicer to the Collection Account.  In addition, each payment
from the applicable counterparty under an Interest Rate Hedge and all Recoveries
(to the extent not previously deposited into the Collection Account) and
Repurchase Proceeds paid by the Seller pursuant to Section 8.2 hereof shall be
deposited to the Collection Account.  All Collections of Purchased Receivables
received by the Servicer shall, prior to deposit in the Collection Account, be
held in trust by the Servicer for the benefit of PARCO, the APA Banks and the
Seller.

               (c)    SETTLEMENT DATES.  On each Settlement Date, the Funding
Agent, at the direction of the Servicer, shall pay, from the Collections for the
related Settlement Period, to the following Persons in the following order of
priority:

                    (i)    FIRST, to the Servicer, to repay any outstanding
          Servicer Advances;

                    (ii)   SECOND, to the Lock Box Bank and the independent
          accountants, on a PRO RATA basis, to pay fees owed and reasonable
          out-of-pocket costs and expenses which are accrued and unpaid;

                    (iii)  THIRD, to the Servicer, any accrued and unpaid
          Servicing Fee;

                    (iv)   FOURTH, to the Back-Up Servicer, any accrued and
          unpaid Back-Up Servicing Fee;

                    (v)    FIFTH, to the Funding Agent, Discount and related
          fees (including commercial paper placement agent fees) on Commercial
          Paper issued by PARCO to fund the Net Investment, as

<PAGE>

          well as, if applicable, any Discount under the Asset Purchase
          Agreements, in each case accrued during the immediately preceding
          Accrual Period; and

                    (vi)   SIXTH, to the Funding Agent, all Program Fees as
          outlined in the Fee Letter;

                    (vii)  SEVENTH, to the Funding Agent, an amount equal to any
          amount described in clause (v) which is then past due;

                    (viii) EIGHTH, to PARCO and the APA Banks, as applicable, an
          amount necessary to reduce the Net Investment to an amount not greater
          than the product of (A) the Advance Percentage and (B) the Net Pool
          Balance;

                    (ix)   NINTH, following any replacement of the Servicer, to
          a successor Servicer to pay the reasonable costs of transition, to the
          extent such costs have not been paid by the terminated Servicer;

                    (x)    TENTH, after the occurrence of the Termination Date,
          to PARCO and the APA Banks, as applicable, any remainder to reduce the
          Net Investment;

                    (xi)   ELEVENTH, prior to the occurrence of the Termination
          Date, the balance, if any, for deposit into the Reserve Account such
          that the amount on deposit therein equals the greater of (A) the
          Minimum Reserve Account Balance and (B) 6% of the Pool Balance;

                    (xii)  TWELFTH, to each applicable Affected Party, on a PRO
          RATA basis, amounts to cover increased costs of such Affiliated Party
          of the type described in Sections 2.7, 2.8, 2.9, 2.10 and 9.6;

                    (xiii) THIRTEENTH, to each applicable Affected Party any
          Indemnified Amounts owing (other than in clause (xii) above), payable
          on a PARI PASSU basis;

                    (xiv)  FOURTEENTH, to the applicable person, any other costs
          and expenses due and owing to PARCO, the Funding Agent and the APA
          Banks; and

                    (xv)   FIFTEENTH, to the Seller, any remaining funds,
          PROVIDED that, following a Termination Date, all remaining collections
          

<PAGE>

          will be used to reduce the Net Investment until the Net Investment is
          reduced to zero.

               (d)    SERVICER ADVANCES.  In the event that, on any date,
Collections are not sufficient to pay the sum of the amounts described in
clauses (ii) through (iv) above due and payable on such day, the Servicer shall
advance an amount equal to such amounts due and payable on such day (each, a
"SERVICER ADVANCE").

               (e)    RESERVE ACCOUNT ADVANCES.  If, on any date, Collections
are not sufficient to pay the sum of the amounts described in clauses (i)
through (viii) above that are then due and payable (after taking into account
any Servicer Advance), funds on deposit in the Reserve Account will be used to
cover such deficiency (PROVIDED, that any such applications with respect to the
amounts described in clause (c)(vi) of this Section shall be made on a
Settlement Date).

          SECTION 2.6 PAYMENTS AND COMPUTATIONS, ETC.  All amounts to be paid or
deposited by or at the direction of the Seller or the Servicer hereunder shall
be paid or deposited in accordance with the terms hereof no later than 1:00 P.M.
(New York time) on the day when due in lawful money of the United States of
America in immediately available funds to a special account (account number
507-940-628) in the name of the Funding Agent and maintained at Chase's office
at 450 West 33rd Street in The City of New York.  The Seller shall, to the
extent permitted by law, pay to the Funding Agent, pursuant to Section
2.5(c)(xiv), interest on all amounts not paid or deposited when due hereunder at
2% per annum above the applicable Base Rate, payable on the next succeeding
Settlement Date (prior to a Termination Event) or on demand (following a
Termination Event); PROVIDED, HOWEVER, that such interest rate shall not at any
time exceed the maximum rate permitted by applicable law.  Such interest shall
be distributed by the Funding Agent to PARCO or the APA Banks, as applicable. 
All computations of interest and all computations of Discount and fees hereunder
shall be made on the basis of a year of 360 days (or, in the case of Discount
calculated at a Base Rate, a year of 365 or 366 days, as applicable) for the
actual number of days (including the first but excluding the last day) elapsed.

          SECTION 2.7 YIELD PROTECTION. (a)  If, after the date hereof, the
adoption of any Law or bank regulatory guideline or any amendment or change in
the interpretation of any existing or future Law or bank regulatory guideline by
any Official Body charged with the administration, interpretation or application
thereof, or the compliance with any directive of any Official Body (in the case
of any bank 

<PAGE>

regulatory guideline, whether or not having the force of Law):

               (i)  shall impose, modify or deem applicable any reserve,
     special deposit or similar requirement (including, without limitation,
     any such requirement imposed by the Board of Governors of the Federal
     Reserve System) against assets of, deposits with or for the account
     of, or credit extended by, any Affected Party or shall impose on any
     Affected Party or on the United States market for certificates of
     deposit or the London interbank market any other condition affecting
     this Agreement, the other Facility Documents, the ownership,
     maintenance or financing of the Purchased Assets or payments of
     amounts due hereunder or its obligation to advance funds hereunder or
     under the other Facility Documents, the ownership, maintenance or
     financing of the Purchased Assets or the Purchased Receivables; or

               (ii) imposes upon any Affected Party any other expense with
     respect to this Agreement, the other Facility Documents, the
     ownership, maintenance or financing of the Purchased Assets, the
     Purchased Receivables or payments of amounts due hereunder or its
     obligation to advance funds hereunder or otherwise in respect of this
     Agreement, the other Facility Documents, the ownership, maintenance or
     financing of the Purchased Assets or the Purchased Receivables;

and the result of any of the foregoing is to increase the cost to such Affected
Party with respect to this Agreement, the other Facility Documents, the
ownership, maintenance or financing of the Purchased Assets, the Purchased
Receivables, the obligations hereunder, the funding of any Purchases hereunder
or under the other Facility Documents, by an amount deemed by such Affected
Party to be material, then, on the next succeeding Settlement Date following
demand by such Affected Party, the Seller shall pay to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such
increased cost or reduction; PROVIDED that no such amount shall be payable with
respect to any period commencing more than sixty (60) days prior to the date
such Affected Party first notifies the Seller of its intention to demand
compensation therefor under this Section 2.7(a); PROVIDED FURTHER that if such
change in Law, rule or regulation giving rise to such increased costs or
reductions is retroactive, then such 60-day period shall be extended to include
the period of retroactive effect thereof.

               (b)  If any Affected Party shall have determined that after the
date hereof, the adoption of any applicable Law or bank regulatory guideline
regarding capital adequacy, or any change therein, or any change in the
interpretation thereof by any Official Body, or any directive regarding capital
adequacy (in the case 

<PAGE>

of any bank regulatory guideline, whether or not having the force of law) of any
such Official Body, has or would have the effect of reducing the rate of return
on capital of such Affected Party (or its parent) as a consequence of such
Affected Party's obligations hereunder or with respect hereto to a level below
that which such Affected Party (or its parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by such Affected Party to
be material, then from time to time, on the next succeeding Settlement Date
after demand by such Affected Party, the Seller shall pay to such Affected Party
such additional amount or amounts as will compensate such Affected Party (or its
parent) for such reduction; PROVIDED that no such amount shall be payable with
respect to any period commencing more than sixty (60) days prior to the date
such Affected Party first notifies the Seller of its intention to demand
compensation therefor under this Section 5.2(a); PROVIDED FURTHER that if such
change in Law, rule or regulation giving rise to such increased costs or
reductions is retroactive, then such 60-day period shall be extended to include
the period of retroactive effect thereof.

               (c)  Anything in this Section 2.7 to the contrary
notwithstanding, if PARCO enters into agreements for the acquisition of
interests in receivables from one or more Other Sellers, PARCO shall ratably
allocate the liability for any amounts under this Section 2.7 ("SECTION 2.7
COSTS") to the Seller and each Other Seller; PROVIDED, HOWEVER, that if such
Section 2.7 Costs are attributable to the Seller, the Originator or the Servicer
and not attributable to any Other Seller, the Seller shall be solely liable for
such Section 2.7 Costs or, if such Section 2.7 Costs are attributable to Other
Sellers and not attributable to the Seller, the Originator or the Servicer, such
Other Sellers shall be solely liable for such Section 2.7 Costs.

          The Funding Agent will, within fifteen (15) days after receipt of
notice of any event occurring after the date hereof which will entitle an
Affected Party to compensation pursuant to this Article II, notify the Seller in
writing.  Any notice by the Funding Agent claiming compensation under this
Article II and setting forth in reasonable detail an explanation therefor and a
calculation of the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error.  In determining such amount, the
Funding Agent or any applicable Affected Party may use any reasonable averaging
and attributing methods.

          SECTION 2.8 ILLEGALITY. (a) Notwithstanding any other provision
herein, if, after the Effective Date, the adoption of any Law or bank regulatory
guideline or any amendment or change in the interpretation of any existing or
future 

<PAGE>

Law or bank regulatory guideline by any Official Body charged with the
administration, interpretation or application thereof, or the compliance with
any directive of any Official Body (in the case of any bank regulatory
guideline, whether or not having the force of Law), shall make it unlawful for
any APA Bank to acquire or maintain a Eurodollar Tranche at the applicable
Eurodollar Rate as contemplated by this Agreement, (i) such APA Bank shall,
within fifteen (15) days after receiving actual knowledge thereof, deliver a
certificate to the Seller (with a copy to the Funding Agent) setting forth the
basis for such illegality, which certificate shall be conclusive absent manifest
error, (ii) the commitment of such APA Bank hereunder to make a portion of a
Eurodollar Tranche, continue any portion of a Eurodollar Tranche as such and
convert a BR Tranche to a Eurodollar Tranche shall forthwith be cancelled, and
such cancellation shall remain in effect so long as the circumstance described
above exists, and (iii) such APA Bank's portion of any Eurodollar Tranche then
outstanding shall be converted automatically to a BR Tranche on the last day of
the related Tranche, or within such earlier period as required by law.

          If any such conversion of a portion of a Eurodollar Tranche occurs on
a day which is not the last day of the related Tranche, the Seller shall pay to
such APA Bank such amounts, if any, as may be required to compensate such APA
Bank for the costs of such conversion.  If circumstances subsequently change so
that it is no longer unlawful for an affected APA Bank to acquire or to maintain
a portion of a Eurodollar Tranche as contemplated hereunder, such APA Bank will,
as soon as reasonably practicable after such APA Bank knows of such change in
circumstances, notify the Seller and the Funding Agent, and upon receipt of such
notice, the obligations of such APA Bank to acquire or maintain its acquisition
of portions of Eurodollar Tranches or to convert its portion of a BR Tranche
into portions of Eurodollar Tranches shall be reinstated.

          (b)  By its execution of an Asset Purchase Agreement, each APA Bank
agrees that, upon the occurrence of any event giving rise to the operation of
Section 2.8(a) with respect to such APA Bank, it will, if requested by the
Seller and to the extent permitted by law or by the relevant Official Body,
endeavor in good faith to change the office at which it books its portions of
Eurodollar Tranches hereunder if such change would make it lawful for such APA
Bank to continue to acquire or to maintain its acquisition of portions of
Eurodollar Tranches hereunder; PROVIDED, HOWEVER, that such change may be made
in such manner that such APA Bank, in its sole determination, suffers no
unreimbursed cost or expense or any other material disadvantage whatsoever.

          (c)  Upon the receipt by the Seller of a claim for reimbursement or 
<PAGE>

compensation under Section 2.7 or Section 2.8 hereof by an Affected Party, if
payment thereof shall not be waived by such Affected Party, the Seller may (a)
request such Affected Party to obtain a replacement bank, financial institution
or structured lender, as applicable, satisfactory to the Seller (in the case of
a replacement lender) and meeting the requirements of an APA Bank hereunder, to
acquire and assume all or a ratable part of such Affected Party's commitment to
make purchases, or interests therein (a "REPLACEMENT PERSON"), (b) request one
or more of the other APA Banks to acquire and assume all or part of such
Affected Party's commitment to make Purchases or interests therein (which
request may be accepted or rejected in the sole discretion of each such APA
Bank), or (c) designate a Replacement Person.  Any such designation of
Replacement Person pursuant to clause (a) or clause (c) above shall be subject
to the prior written consent of the Funding Agent (which consent shall not be
unreasonably withheld).  Upon notice from the Seller, such Affected Party shall
assign its commitment to make Purchases, or interests therein, and its other
rights and obligations (if any) hereunder, or a ratable share thereof, to the
Replacement Person or Replacement Persons designated by the Seller for a
purchase price equal to the sum of the principal amount of the Purchases or
interests therein, so assigned, all accrued and unpaid yield thereon and any
other amounts (including fees) to which such Affected Party is entitled
hereunder; PROVIDED that (i) the Seller shall provide such Affected Party with
an officer's certificate stating that such Replacement Person has advised the
Seller that it is not subject to, or has agreed not to seek, such increased
amount and (ii) any such assignment shall be without recourse, representation or
warranty by such Affected Party, and upon effectiveness of such assignment, the
obligations of such APA Bank hereunder shall be extinguished.

          SECTION 2.9 TAXES.  (a)  All payments made by the Seller, the
Originator or the Servicer to the Funding Agent for the benefit of PARCO and the
APA Banks under this Agreement and any other Facility Document shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Official Body (EXCLUDING (i) taxes
imposed on the net income of the Funding Agent or any other Affected Party,
however denominated, and (ii) franchise taxes imposed on the net income of the
Funding Agent or any other Affected Party in each case imposed: (1) by the
United States or any political subdivision or taxing authority thereof or
therein; (2) by any jurisdiction under the laws of which the Funding Agent or
such Affected Party or lending office is organized or in which its lending
office is located, managed or controlled or in which its principal office is
located or any political subdivision or taxing authority thereof or therein; or
(3) by reason of any connection between the jurisdiction imposing such tax and
the Funding Agent, such Affected Party or such lending office other than a
connection arising solely from this Agreement or any other Facility Document or
any transaction hereunder or thereunder) (all such non-excluded taxes, levies,
imposts, duties,

<PAGE>

charges, fees, deductions or withholdings, collectively or individually, 
"TAXES").  If any such Taxes are required to be withheld from any amounts 
payable to the Funding Agent or any Affected Party hereunder, the amounts so 
payable to the Funding Agent or such Affected Party shall be increased to the 
extent necessary to yield to the Funding Agent or such Affected Party (after 
payment of all Taxes) all amounts payable hereunder at the rates or in the 
amounts specified in this Agreement and the other Facility Documents. The 
Seller shall indemnify the Funding Agent or any such Affected Party for the 
full amount of any such Taxes on the Settlement Date occurring after the date 
of written demand therefor by the Funding Agent; PROVIDED that no Person 
shall be indemnified pursuant to this Section 2.9(a) to the extent the reason 
for such indemnification relates to, or arises from, the failure by such 
Person to comply with the provisions of Section 2.9(b).

               (b)  Each Affected Party that is not incorporated under the laws
of the United States of America or a state thereof or the District of Columbia
shall:

               (i)  prior to becoming a party to any Facility Document, deliver
     to the Seller (A) two duly completed copies of IRS Form 1001 or Form 4224,
     or successor applicable form, as the case may be, and (B) an IRS Form W-8
     or W-9, or successor applicable form, as the case may be;

               (ii)  deliver to the Seller two (2) further copies of any such
     form or certification on or before the date that any such form or
     certification expires or becomes obsolete and after the occurrence of any
     event requiring a change in the most recent form previously delivered by it
     to the Seller; and

               (iii)  obtain such extensions of time for filing and complete
     such forms or certifications as may reasonably be requested by the Seller;

unless, in any such case, an event (including, without limitation, any change in
treaty, law or regulation) has occurred after the Effective Date and prior to
the date on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent such Affected Party from duly
completing and delivering any such form with respect to it, and such Affected
Party so advises the Seller.  Each such Affected Party so organized shall
certify (i) in the case of an IRS Form 1001 or IRS Form 4224, that it is
entitled to receive payments under the this Agreement and the other Facility
Documents without deduction or withholding of any United States federal income
taxes and (ii) in the case of an IRS Form W-8 or IRS Form W-9, that it is
entitled to an exemption from United States backup 

<PAGE>

withholding tax.  Each Person that is a purchaser or participant under an Asset
Purchase Agreement, or which otherwise becomes a party to an Asset Purchase
Agreement as an APA Bank, shall, prior to the effectiveness of such assignment,
participation or addition, as applicable, be required to provide all of the
forms and statements required pursuant to this Section 2.9.

          SECTION 2.10 BROKEN FUNDING.  In the event of (a) the payment of any
principal of any Eurodollar Tranche other than on the last day of such Tranche
(including as a result of the occurrence of the Termination Date or an optional
prepayment of a Eurodollar Tranche), (b) the conversion of any Eurodollar
Tranche other than on the last day of such related Tranche, or (c) any failure
to borrow, convert, continue or prepay any Eurodollar Tranche on the date
specified in any notice delivered pursuant hereto, then, in any such event, the
Seller shall compensate the applicable APA Banks for the loss, cost and expense
attributable to such event.  Such loss, cost or expense to any APA Banks shall
be deemed to include an amount determined by such APA Bank to be the excess, if
any, of (i) the amount of the Discount, as the case may be, which would have
accrued on the principal amount of such Eurodollar Tranche had such event not
occurred, at a Eurodollar Rate that would have been applicable to such
Eurodollar Tranche, for the period from the date of such event to the last day
of such Tranche (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Accrual Period for such Tranche), over
(ii) the amount of interest which would accrue on such principal amount for such
period at the interest rate which such APA Bank would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the interbank eurodollar market.  Within fifteen (15)
days after any APA Bank hereunder receives actual knowledge of any of the events
specified in this Section 2.10, a certificate of such APA Bank setting forth in
reasonable detail a calculation of any amount or amounts that such APA Bank is
entitled to receive pursuant to this Section 2.10 and the reason(s) therefor
shall be delivered to the Seller and shall be conclusive absent manifest error. 
The Seller shall pay each such APA Bank the amount shown as due on any such
certificate on the next succeeding Settlement Date after receipt thereof.

          SECTION 2.11 INABILITY TO DETERMINE EURODOLLAR RATE.  If, prior to the
first day on which any Eurodollar Tranche commences:

          (i)  the Funding Agent shall have determined or shall have been
     notified (which determination or notification, in the absence of manifest
     error, shall be conclusive and binding upon the Seller) that, by reason of
     circumstances affecting the relevant market, adequate and reasonable means
     do not exist for ascertaining a Eurodollar Rate for such Tranche; or

          (ii) the Funding Agent shall have received notice from the Required
     APA Banks that a Eurodollar Rate determined or to be determined 

<PAGE>

     for such Tranche will not adequately and fairly reflect the cost to such
     APA Bank(s) (as conclusively certified by such APA Bank(s)) of purchasing
     or maintaining its/their affected portions of Eurodollar Tranches during
     the related Accrual Period;

then, in either such event, the Funding Agent shall give telecopy or telephonic
notice thereof (confirmed in writing) to the Seller and the APA Banks as soon as
practicable (but, in any event, within fifteen (15) days after such
determination or notice, as applicable) thereafter.  Until such notice has been
withdrawn by the Funding Agent, no further Eurodollar Tranches shall be made. 
The Funding Agent agrees to withdraw any such notice as soon as reasonably
practicable after the APA Banks Agent is notified of a change in circumstances
which makes such notice inapplicable.

          SECTION 2.12 SHARING OF PAYMENTS, ETC.  If PARCO or any APA Bank (for
purposes of this Section 2.12 only, being a "RECIPIENT") shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) on account of any interest in the Purchased Assets owned
by it in excess of its ratable share of payments on account of any interest in
the Purchased Assets obtained by PARCO and/or the APA Banks entitled thereto,
such Recipient, through the Funding Agent, shall forthwith purchase from PARCO
and/or the APA Banks, as applicable, entitled to a share of such amount,
participations in the percentage interests owned by such Persons as shall be
necessary to cause such Recipient to share the excess payment ratably with each
such other Person entitled thereto; PROVIDED, HOWEVER, that if all or any
portion of such excess payment is thereafter recovered from such Recipient, such
purchase from each such other Person shall be rescinded and each such other
Person shall repay to the Recipient, through the Funding Agent, the purchase
price paid by such Recipient for such participation to the extent of such
recovery, together with an amount equal to such other Person's ratable share
(according to the proportion of (a) the amount of such other Person's required
payment to (b) the total amount so recovered from the Recipient) of any interest
or other amount paid or payable by the Recipient in respect of the total amount
so recovered.

          SECTION 2.13 RESERVE ACCOUNT.

                    (a)      ESTABLISHMENT OF THE RESERVE ACCOUNT.   The
Servicer, for the benefit of PARCO, the APA Banks and the Funding Agent shall
establish and maintain or cause to be established and maintained with a bank
acceptable to the Funding Agent, in the name of the Funding Agent for the
benefit of PARCO and the

<PAGE>

APA Banks, as an Eligible Account, a reserve account (the "RESERVE ACCOUNT"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of PARCO and APA Banks.  The Funding Agent, for the benefit
of PARCO and the APA Banks, shall possess all right, title and interest in all
funds on deposit from time to time in the Reserve Account and in all proceeds
thereof.  The Reserve Account shall be under the sole dominion and control of
the Funding Agent for the benefit of PARCO and the APA Banks.  The taxpayer
identification number associated with the Reserve Account shall be that of the
Seller and the Seller will report for Federal, state and local income tax
purposes, the income, if any, represented by the Reserve Account.  If the
Reserve Account shall at any time cease to be an Eligible Account, then the
Servicer shall, immediately thereafter, establish a new Eligible Account as the
Reserve Account, which Eligible Account shall be maintained as set forth in this
Section 2.13, and shall, on such date, transfer all funds in the existing
Reserve Account to such new Reserve Account.

          On the Effective Date, the Seller shall deposit an amount in the
Reserve Account equal to the Minimum Reserve Account Balance as of such date. 
On each Settlement Date, the Seller shall deposit or cause to be deposited in
the Reserve Account, from Collections, an amount in accordance with Section
2.5(c)(xi).  On each Business Day, the Seller shall deposit or cause to be
deposited in the Reserve Account an amount sufficient to ensure that the Minimum
Reserve Account Balance is satisfied.

               (b)      ADMINISTRATION OF THE RESERVE ACCOUNT.  Funds on deposit
in the Reserve Account shall, at the direction of the Servicer, be invested by
the Funding Agent in Permitted Investments.   Each instruction by the Servicer
shall designate specific investments and shall certify that the investments so
specified constitute Permitted Investments.  The Servicer, shall manage the
maturities of such investments such that amounts available for withdrawal on
each Settlement Date will be sufficient to comply with the requirements of
Section 2.13(c).  The Funding Agent shall not be liable for any loss incurred in
connection with any investment in the Reserve Account.

               (c)      WITHDRAWALS FROM RESERVE ACCOUNT.   If, on any
Settlement Date, the Servicer shall have insufficient Collections to pay the
amounts required under Sections 2.5(c)(i)-(viii), the Servicer shall be required
to direct the Funding Agent to make a withdrawal from the Reserve Account in an
amount sufficient to pay any remaining amounts owing thereunder.  If, on any
Settlement Date, after giving effect to the transactions occurring on such
Settlement Date, funds on deposit in the Reserve Account are in excess of the
greater of (x) the Minimum

<PAGE>

Reserve Account Balance and (y) 6% of the Pool Balance at such time, the
Servicer may withdraw and apply such excess as Collections in accordance with
Section 2.5(c); PROVIDED, HOWEVER that on each Settlement Date occurring after
the Termination Date, such excess shall be treated as Principal Collections and
applied in accordance with Section 2.5(c)(x).  After any Optional Sale which has
fully satisfied the requirements of Section 3.3, and provided that no
Termination Event has occurred and is continuing, the Servicer may withdraw and
remit to the Seller funds from the Reserve Account in an amount equal to the
product of (i) the  amount in the Reserve Account immediately prior to such
Optional Sale and (ii) a fraction, the numerator of which is the Outstanding
Balance of Eligible Receivables sold and assigned pursuant to such Optional
Sale, and the denominator of which is the Net Pool Balance before giving effect
to the Optional Sale; PROVIDED, HOWEVER that after such withdrawal, the amount
in the Reserve Account shall not be less than the Minimum Reserve Account
Balance.  On the Business Day succeeding the Final Collection Date, the Servicer
shall withdraw from the Reserve Account all amounts on deposit therein for
remittance to the Seller.  The Funding Agent hereby grants to the Servicer the
authority to make the withdrawals from the Reserve Account described in this
Section 2.13(c).


          SECTION 2.14 COLLECTION ACCOUNT.

               (a)      ESTABLISHMENT OF THE COLLECTION ACCOUNT.   The Servicer,
for the benefit of PARCO, the APA Banks and the Funding Agent shall establish
and maintain or cause to be established and maintained with a bank acceptable to
the Funding Agent, in the name of the Funding Agent for the benefit of PARCO and
the APA Banks, as an Eligible Account, a collection account (the "COLLECTION
ACCOUNT"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of PARCO and the APA Banks.  The Funding Agent,
for the benefit of PARCO and the APA Banks, shall possess all right, title and
interest in and to all funds on deposit from time to time in the Collection
Account and in all proceeds thereof.   The taxpayer identification number
associated with the Collection Account shall be that of the Seller, and the
Seller will report for Federal, state and local income tax purposes, the income,
if any, represented by the Collection Account.  If the Collection Account shall
at any time cease to be an Eligible Account, then the Servicer shall,
immediately thereafter, establish a new Eligible Account as the Collection
Account, which Eligible Account shall be maintained as set forth in this Section
2.14, and shall, on such date, transfer all funds in the existing Collection
Account to such new Collection Account.

               (b)      ADMINISTRATION OF THE COLLECTION ACCOUNT.  Funds on
deposit in the Collection Account shall, at the direction of the Servicer, be
invested by the Funding Agent in Permitted Investments.   The Servicer shall
designate by standing or periodic instructions delivered to the Funding Agent
specific investments and shall certify that the investments so specified
constitute Permitted Investments.

<PAGE>

If no instructions are so in effect, the Funding Agent shall invest such funds
in Permitted Investments in its sole discretion.  The Funding Agent, at the
direction of the Servicer, shall manage the maturities of such investments such
that amounts available for withdrawal on each Settlement Date will be sufficient
to comply with the requirements of Section 2.14(c).  The Funding Agent shall not
be liable for any loss incurred in connection with any investment in the
Collection Account.


               (c)      WITHDRAWALS FROM COLLECTION ACCOUNT.   The Funding Agent
shall have the sole right of withdrawal from the Collection Account and shall
withdraw funds on deposit therein on each Settlement Date or otherwise in
accordance with the terms of this Agreement.   On the Business Day succeeding
the Final Collection Date, the Funding Agent shall withdraw from the Collection
Account all amounts on deposit therein for remittance to the Seller.  On and
after the occurrence of a Servicer Termination Event or a Termination Event, the
Servicer shall remit daily, immediately upon receipt, to the Collection Account
all Collections received with respect to any Purchased Receivables.  Following
an Optional Sale, an optional repurchase pursuant to Section 3.4 or a Permitted
Securitization Transaction immediately after which the Net Investment is equal
to zero and all Aggregate Unpaids have been paid by the Seller to the Funding
Agent, PARCO and the APA Banks, all amounts in the Collection Account shall be
released to the Seller. 
<PAGE>

                                     ARTICLE III

                       CONDITIONS OF PURCHASES; OPTIONAL SALES

          SECTION 3.1 CONDITIONS PRECEDENT TO EFFECTIVENESS.  This Agreement
shall become effective on the first day on which the Funding Agent, on behalf of
PARCO and the APA Banks, shall have received the following (the "EFFECTIVE
DATE"), each in form and substance satisfactory to the Funding Agent:

               (a)    This Agreement and the Asset Purchase Agreement executed
by each party thereto, together with the certificates required under each such
agreement, and the Demand Note, executed by AFL in favor of the Seller;

               (b)    A copy of the resolutions of the Board of Directors of the
Seller and AFL approving this Agreement and the other Facility Documents to be
delivered by it hereunder and the transactions contemplated hereby, certified by
its Secretary or Assistant Secretary;

               (c)    The Certificate, or Articles, of Incorporation of each of
the Seller and AFL certified by the appropriate Secretary of State;

               (d)    Good Standing Certificates for each of the Seller and AFL
issued by the Secretary of State of Delaware and the Secretary of State of 
Minnesota, respectively;

               (e)    A certificate of the Secretary or Assistant Secretary of
each of the Seller and AFL certifying (i) the names and true signatures of the
officers authorized on its behalf to sign this Agreement and the other Facility
Documents to be delivered by it hereunder (on which certificate the Funding
Agent, PARCO and the APA Banks may conclusively rely until such time as the
Funding Agent shall receive from the Seller a revised certificate meeting the
requirements of this subsection (e)) and (ii) a copy of the Seller's by-laws;

               (f)    Acknowledgment copies of proper UCC-1 Financing Statements
(executed by the Originator and/or Seller, as applicable), as may be necessary
or, in the opinion of the Funding Agent, desirable under the UCC of all
appropriate jurisdictions or any comparable law to perfect the Funding Agent's,
PARCO's and the APA Banks' respective interests in all Purchased Receivables and
Related Security in which an interest may be assigned to it hereunder;

               (g)    Certified copies of Requests for Information or Copies
(Form UCC-11) (or a similar search report certified by a party acceptable to the
Funding Agent), dated a date reasonably near to the date of the initial
Purchase, listing all effective financing statements which name the Seller or
the Originator

<PAGE>

(under their respective present names and any previous names) as debtor and
which are filed in the jurisdictions in which filings were made pursuant to
subsection (f) of this Section 3.1, together with copies of such financing
statements;

               (h)    The Lock-Box Agreement, executed by the parties thereto;

               (i)    The Receivables Purchase Agreement, executed by the Seller
and the Originator, together with copies of all documents required to be
delivered thereunder as a condition precedent to the initial purchase of
Receivables thereunder;

               (j)    Opinion(s) of Dorsey & Whitney LLP, special counsel for
the Seller and AFL in form and substance satisfactory to the Funding Agent, as
to such matters as the Funding Agent may reasonably request;

               (k)    The Fee Letter shall have been duly executed and delivered
by the Seller and accepted by the Funding Agent; 

               (l)    S&P shall have confirmed it's A-1 rating of PARCO's
Commercial Paper and Moody's shall have confirmed its P-1 rating of PARCO's
Commercial Paper; and

               (m)    Such other documents, instruments, certificates and
opinions of counsel as the Funding Agent, PARCO or the APA Banks shall
reasonably request.

          SECTION 3.2 CONDITIONS PRECEDENT TO ALL PURCHASES.  Each Purchase
(including the initial Purchase) shall be subject to the further conditions
precedent that:

               (a)    on or prior to the date thereof, the Servicer shall have
delivered to the Funding Agent, (1) in form and substance reasonably
satisfactory to the Funding Agent, a completed Purchase Notice dated at least
one Business Day prior to the date of such Purchase and containing such
additional information as may be reasonably requested by the Funding Agent, (2)
a duly completed Monthly Report for the immediately preceding Settlement Period
for which a Monthly Report was due in accordance with this Agreement, and (3)
evidence, in form and substance satisfactory reasonably to the Funding Agent,
that the Seller has entered into Interest Rate Hedges satisfying the
requirements of Section 5.1(l) (together, for any Interest

<PAGE>

Rate Hedges the counterparty of which is not a Funding Agent, with an Interest
Rate Hedge Assignment Acknowledgment duly executed by such counterparty and
concurrently delivered to the Funding Agent); and

               (b)    on the date of each Purchase, the following statements
shall be true, and the Seller, by accepting the amount for an Incremental
Purchase or by receiving the proceeds of Collections in consideration for a
Purchase pursuant to Section 2.5, shall be deemed to have certified that:

                    (i)    The representations and warranties contained in
          Section 4.1 hereof and Section 4.1 of the Receivables Purchase
          Agreement are correct on and as of such day as though made on and as
          of such date;

                    (ii)   No event has occurred and is continuing, or would
          result from such Purchase which constitutes a Termination Event or
          would constitute a Termination Event but for the requirement that
          notice be given or time elapse or both; and

                    (iii)  The provisions of Section 2.2(a) hereof have been
          satisfied in all material respects.

               (c)    at its request, the Funding Agent shall have received
(with copies to the Rating Agencies indicating that each Rating Agency is
entitled to rely thereon), with respect to any state in which, after giving
effect to such Purchase, more than 10% of the aggregate Outstanding Balance of
all Receivables comprising the Servicing Portfolio Balance shall relate to
Financed Vehicles titled (or to be titled) in such state, an opinion of counsel
(or a reliance letter) in form and substance reasonably satisfactory to the
Funding Agent; PROVIDED that no such opinion of counsel shall be necessary with
respect to any such state to the extent the Funding Agent shall have received,
on, or prior to, the Effective Date or on any previous Purchase Date, such an
opinion of counsel with respect to such state (unless, in the opinion of any of
them, reasonable legal or factual reasons shall exist at such time to require an
additional opinion of counsel with respect to such state); and

               (d)    the Funding Agent shall have received such other approvals
or documents as the Funding Agent may reasonably request.

          SECTION 3.3 OPTIONAL SALES.  (a)  On any Optional Sale Date, the
Seller shall have the right to prepay all or a portion of the Net Investment in
connection the sale and assignment to the Seller by PARCO or the APA Banks, as
applicable, of Optional Sale Related Collateral (each, an "OPTIONAL SALE"),
subject to the following terms and conditions:

<PAGE>

                    (i)    The Seller shall have given the Funding Agent at
          least five (5) Business Days' prior written notice of its intent to
          effect an Optional Sale;

                    (ii)   Any Optional Sale shall be in connection with a
          Permitted Securitization Transaction or a Permitted Originator
          Transaction;

                    (iii)  Unless an Optional Sale is to be effected on a
          Settlement Date (in which case the relevant calculations with respect
          to such Optional Sale shall be reflected on the applicable Monthly
          Report), the Servicer shall deliver to the Funding Agent a Servicer's
          Optional Sale Date Certificate, together with evidence to the Funding
          Agent (which evidence may consist solely of the Servicer's Optional
          Sale Date Certificate) that the Seller shall have sufficient funds on
          the related Optional Sale Date to effect the contemplated Optional
          Sale in accordance with this Agreement.  In effecting an Optional
          Sale, the Seller may (i) use the proceeds of sales of Receivables
          (which sales must be made in arm's-length transactions to Persons
          other than AFL), and (ii) give effect to Principal Collections on
          deposit in the Collection Account at such time to the extent
          consistent with the requirements of clause (v) below (as evidenced by
          the Servicer's Optional Sale Date Certificate).

                    (iv)   In connection with any such Optional Sale that does
          not constitute a prepayment in full of the outstanding Net Investment
          (x) Receivables constituting part of the Optional Sale Related
          Collateral with respect to such Optional Sale shall be selected in
          accordance with the "FIFO" method (excluding, however, any Purchased
          Receivable and Related Security subject to a Repurchase Obligation and
          Purchased Receivables and Related Security which are not included in
          the Net Pool Balance), and (y) following receipt by the Funding Agent
          of the amounts referred to in clause (vi) below, there shall be sold
          and assigned to the Seller all of the right, title and interest of
          PARCO and the APA Banks, as applicable, and under the Optional Sale
          Related Collateral, and such Optional Sale Related Collateral shall be
          released from the Lien of this Agreement (subject to the requirements
          of clause (v) below).

                    (v)    After giving effect to the Optional Sale and the
          assignment to the Seller of Optional Sale Related Collateral on any 

<PAGE>

          Optional Sale Date, (x) the remaining Net Investment (less Principal
          Collections held in the Collection Account and the Lock-Box Account at
          the close of business on the Optional Sale Date and not yet applied)
          shall be less than or equal to the product of the Advance Percentage
          and the Net Pool Balance and (y) a Termination Event or Potential
          Termination Event shall not have resulted.

                    (vi)   On the related Optional Sale Date, the Funding Agent
          shall have received, for the benefit of PARCO or the APA Banks, as
          applicable, in immediately available funds, an amount equal to the sum
          of (i) the portion of PARCO's or the APA Banks' Net Investment to be
          prepaid PLUS (ii) an amount equal to all unpaid Carrying Costs
          (including Carrying Costs not yet accrued) to the extent reasonably
          determined by the Funding Agent to be attributable to that portion of
          the Net Investment to be prepaid in connection with the Optional Sale
          PLUS (iii) an aggregate amount equal to the sum of all other amounts
          due and owing to the Funding Agent, PARCO and the APA Banks, as
          applicable, under this Agreement and the other Facility Documents, to
          the extent accrued to such date and to accrue thereafter, as
          reasonably determined by the Funding Agent to be attributable to that
          portion of the Net Investment to be prepaid.

                    (vii)  On or prior to each Optional Sale Date, the Seller
          shall have delivered to the Funding Agent a list specifying all
          Contracts under which the Receivables to be sold and assigned pursuant
          to such Optional Sale arose.

          (b)  The Seller hereby agrees to pay the reasonable legal fees and
expenses of the Funding Agent, PARCO and the APA Banks in connection with any
Optional Sale (including, but not limited to, expenses incurred in connection
with the release of the Lien of the Funding Agent over the Purchased Assets in
connection with such Optional Sale).

          (c)  In connection with any Optional Sale, on the related Optional
Sale Date, the Funding Agent, on behalf of PARCO and the APA Banks, shall, at
the expense of the Seller (i) execute such instruments of release with respect
to the Optional Sale Related Collateral, in recordable form if necessary, in
favor of the Seller as the Seller may reasonably request, (ii) deliver any
Optional Sale Related Collateral in its possession to the Seller and (iii)
otherwise take such actions as are necessary and appropriate to release the Lien
of the Funding Agent on the Optional 

<PAGE>

Sale Related Collateral and release and deliver to the Seller such Optional Sale
Related Collateral.

          SECTION 3.4 OPTIONAL REPURCHASE.  At any time, the Seller may in its
sole discretion, upon ten (10) days' prior verbal notice (to be confirmed by 5
days' prior written notice) to the Funding Agent, repurchase all of the
Purchased Receivables from PARCO at a price which shall equal the amount of all
Aggregate Unpaids.

 
<PAGE>

                                      ARTICLE IV

                            REPRESENTATIONS AND WARRANTIES

          SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER.  The Seller
represents and warrants to PARCO, the APA Banks and the Funding Agent on the
date hereof and on each Purchase Date as follows:

               (a)    DUE INCORPORATION AND GOOD STANDING.  The Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction named at the beginning hereof and is duly qualified to
do business, and is in good standing, in every jurisdiction in which the nature
of its business requires it to be so qualified.

               (b)    DUE AUTHORIZATION AND NO CONFLICT.  The execution,
delivery and performance by the Seller of this Agreement, each other Facility
Document to which the Seller is a party and all other agreements, instruments
and documents to be delivered by it hereunder or thereunder or in connection
herewith or therewith, and the transactions contemplated hereby and thereby, are
within the Seller's corporate powers, have been duly authorized by all necessary
corporate action, do not contravene (i) the Seller's charter or by-laws, (ii)
any law, rule or regulation applicable to the Seller, (iii) any contractual
restriction contained in any material indenture, loan or credit agreement,
lease, mortgage, security agreement, bond, note, or other agreement or
instrument binding on or affecting the Seller or its property or (iv) any order,
writ, judgment, award, injunction or decree binding on or affecting the Seller
or its property, and do not result in or require the creation of any Lien upon
or with respect to any of its properties (other than as contemplated hereunder);
and no transaction contemplated hereby requires compliance with any bulk sales
act or similar law.  This Agreement and all other Facility Documents to which
the Seller is a party have been duly executed and delivered on behalf of the
Seller.

               (c)    GOVERNMENTAL CONSENT.  No authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Seller of this Agreement, any of the Facility Documents to which the Seller
is a party or any other agreement, document or instrument to be delivered by it
hereunder or thereunder.

               (d)    ENFORCEABILITY OF FACILITY DOCUMENTS.  This Agreement and
each other Facility Document to be delivered by the Seller in connection
herewith constitute the legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance with their respective terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
fraudulent

<PAGE>

conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).

               (e)    NO LITIGATION.  There are no actions, suits or proceedings
pending, or to the knowledge of the Seller threatened, against or affecting the
Seller or any of its Subsidiaries, or the property of the Seller or any of its
Subsidiaries, in any court, or before any arbitrator of any kind, or before or
by any governmental body, which may materially adversely affect (i) the
financial condition of the Seller and its Affiliates taken as a whole or (ii)
the ability of the Seller to perform its obligations under this Agreement or any
of the other Facility Documents to which the Seller is a party or (iii) the
collectibility of the Purchased Receivables.  Neither the Seller nor any of it's
Affiliates is in default with respect to any order of any court, arbitrator or
governmental body.

               (f)    USE OF PROCEEDS.  No proceeds of any Purchase will be used
by the Seller to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.

               (g)    ELIGIBILITY OF PURCHASED RECEIVABLES; PERFECTION OF
INTEREST IN PURCHASED RECEIVABLES.         

                    (i)    As of the date of Purchase hereunder of each
          Purchased Receivable, such Purchased Receivable will satisfy the
          conditions of the definition of "Eligible Receivable."

                    (ii)   Prior to the Purchase of each Purchased Asset
          hereunder, the Seller is or will be the lawful owner of such Purchased
          Asset free and clear of any Lien, and upon each Purchase of Purchased
          Assets hereunder, the Funding Agent, on behalf of PARCO and the APA
          Banks, shall acquire a valid and perfected first priority security or
          ownership interest in such Purchased Assets; and no effective
          financing statement or other instrument similar in effect covering any
          Purchased Receivable, the Related Security, Collections or any other
          Purchased Assets shall at any time be on file in any recording office
          except such as may be filed in accordance with this Agreement or the
          Receivables Purchase Agreement.

               (h)    ACCURACY OF INFORMATION.  No Purchase Notice or Monthly
Report (if prepared by the Seller or the Servicer, or to the extent that 

<PAGE>

information contained therein is supplied by the Seller), information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished by the Seller to the Funding Agent, PARCO or any APA Bank in
connection with this Agreement is or shall be inaccurate in any material respect
as of the date it is or shall be dated or (except as otherwise disclosed to the
Funding Agent, PARCO or any such, as the case may be, at such time or promptly
thereafter) as of the date so furnished, or contains or shall contain any
material misstatement of fact or omits or shall omit to state a material fact or
any fact necessary to make the statements contained therein not misleading.

               (i)    LOCATION OF CHIEF EXECUTIVE OFFICE AND RECORDS.  The chief
place of business and chief executive office of the Seller are located at the
address of the Seller referred to in Section 9.2 hereof and the locations of the
offices where the Seller keeps all the Records are listed on Exhibit H hereto
(or at such other locations, notified to the Funding Agent, in jurisdictions
where all action required by Section 6.5 has been taken and completed).

               (j)    LOCK-BOX BANK INFORMATION.  The name and address of the
Lock-Box Bank, together with the location and account number of the Lock-Box, is
specified in Exhibit I hereto (or at such other Lock-Box Bank and/or with such
other Lock-Box as have been notified to the Funding Agent in accordance with
Section 5.3(d) and with respect to which (and with respect to all Collections to
be deposited therein) all action required by Section 5.3(d) has been taken and
completed).

               (k)    NO TRADE NAMES.  The Seller has no trade names, fictitious
names, assumed names or "doing business as" names.

               (l)    SEPARATE CORPORATE EXISTENCE.  The Seller is operated as
an entity with assets and liabilities distinct from those of the Originator and
any other Affiliates of the Seller, and the Seller hereby acknowledges that the
Funding Agent, PARCO and each of the APA Banks are entering into the
transactions contemplated by this Agreement in reliance upon the Seller's
identity as a separate legal entity from the Originator and each such Affiliate.
Since its incorporation, the Seller has been (and will be) operated in such a
manner as to comply with the covenants set forth in Section 5.1(k).

               (m)    INVESTMENTS.  The Seller does not own or hold, directly or
indirectly, any capital stock or equity security of, or any equity interest in,
any Person.

               (n)    FACILITY DOCUMENTS.  The Receivables Purchase Agreement is
the only agreement pursuant to which the Seller purchases and receives
contributions of Contracts and Receivables, and the Facility Documents 
delivered to

<PAGE>

the Funding Agent, PARCO and the APA Banks represent all material agreements
up to this time between the Originator, on the one hand, and the Seller, on the
other.  The Seller has furnished to the Funding Agent true, correct and complete
copies of each Facility Document to which the Seller is a party, each of which
is in full force and effect.  Neither the Seller nor any Affiliate party thereto
is in default of any of its obligations thereunder in any material respect. 
Upon the purchase and/or contribution of each Receivable pursuant to the
Receivables Purchase Agreement, the Seller shall be the lawful owner of, and
have good title to, such Receivable and all assets relating thereto, free and
clear of any Liens.  All such assets are transferred to the Seller without
recourse to the Originator except as described in the Receivables Purchase
Agreement.  The purchases of such assets by the Seller constitute valid and true
sales for consideration (and not merely a pledge of such assets for security
purposes) and the contributions of such assets received by the Seller constitute
valid and true transfers for consideration, each enforceable against creditors
of the Originator, and no such assets shall constitute property of the
Originator.

               (o)    BUSINESS.  Since its incorporation, the Seller has
conducted no business other than the purchase and receipt of Receivables and
related assets from the Originator under the Receivables Purchase Agreement, the
sale of Purchased Assets under this Agreement to finance any such Purchases,
other transactions provided for herein and such other activities as are
incidental to the foregoing.

               (p)    OWNERSHIP OF THE SELLER. One hundred percent (100%) of the
outstanding capital stock of the Seller is directly owned (both beneficially and
of record) by the Originator.  Such stock is validly issued, fully paid and
nonassessable and there are no options, warrants or other rights to acquire
capital stock from the Seller.

               (q)    TAXES.  The Seller has filed or caused to be filed all
Federal, state and local tax returns which are required to be filed by it, and
has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the Seller has set aside
adequate reserves on its books in accordance with generally accepted accounting
principles and which have not given rise to any Liens.

               (r)    SOLVENCY; FRAUD.  The Seller: (i) is not "insolvent" (as
such term is defined in Section 101(32)(A) of the Bankruptcy Code), (ii) is able
to pay its 

<PAGE>

debts as they mature; and (iii) does not have unreasonably small capital for the
business in which it is engaged or for any business or transaction in which it
is about to engage.  There is no fraud on the part of the Seller or, to the
knowledge of the Seller, on the part of any other party to any of the Facility
Documents in connection with the transactions contemplated by this Agreement or
any of the other Facility Documents.

               (s)    SOFTWARE.  Except as set forth in the Receivables Purchase
Agreement, the Servicer has (or will have, concurrently with the effectiveness
hereof) an enforceable right (whether by license, sublicense or assignment) to
use all of the computer software used to account for the Purchased Receivables
to the extent necessary to administer the Purchased Receivables.

               (t)    SELECTION OF CONTRACTS; CONTRACT FILE COMPLETE.  No
selection procedures reasonably believed by the Seller to be adverse to PARCO
and the APA Banks were utilized in selecting the Contracts under which
Receivables are purchased hereunder.  There exists a Contract File pertaining to
each Purchased Receivable and such Contract File contains, without limitation,
each of the items described in the definition of "Contract File." Each document
contained in the Contract File which is required to be signed by the Obligor has
been signed by the Obligor in the appropriate spaces, and all blanks on any form
contained in the Contract File have been properly filled in and each such form
has otherwise been correctly prepared.  Each Contract File is held by AFL.

               (u)    INVESTMENT COMPANY ACT.  The Seller is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

               (v)    YEAR 2000.  The Seller has (i) undertaken a detailed
review and assessment of all areas within its business and operations (including
its servicing operations) that could be adversely affected by the failure of the
Seller to be Year 2000 Compliant on a timely basis, (ii) developed a detailed
plan and timetable for becoming Year 2000 Compliant on a timely basis, and (iii)
implemented and will implement that plan in accordance with that timetable in
all material respects;

          SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF THE SERVICER.  The
Servicer represents and warrants to PARCO, the APA Banks and the Funding Agent
on the date hereof  (in the case of the initial Servicer) and in the case of any
Servicer appointed hereafter pursuant to Section 6.1, as of the date of its
acceptance of its 

<PAGE>

appointment, and on each Purchase Date as follows:

               (a)    DUE INCORPORATION AND GOOD STANDING.  The Servicer is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and is duly qualified to do business, and is in
good standing, in every jurisdiction in which the nature of its business
requires it to be so qualified, except where the failure to be so qualified
would not materially adversely affect its ability to perform its obligations
hereunder.

               (b)    DUE AUTHORIZATION AND NO CONFLICT.  The execution,
delivery and performance by the Servicer of this Agreement, each other Facility
Document to which the Servicer is a party and all other agreements, instruments
and documents to be delivered hereunder and thereunder, and the transactions
contemplated hereby and thereby, are within the Servicer's powers, have been
duly authorized by all necessary action, do not contravene (i) the Servicer's
organizational documents and by-laws, (ii) any law, rule or regulation
applicable to the Servicer, (iii) any contractual restriction contained in any
material indenture, loan or credit agreement, lease, mortgage, security
agreement, bond, note, or other agreement or instrument binding on or affecting
the Servicer or its property or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting the Servicer or its property, and
do not result in or require the creation of any Lien upon or with respect to any
of its properties.  This Agreement and each other Facility Document to which the
Servicer is a party have been duly executed and delivered on behalf of the
Servicer.

               (c)    GOVERNMENTAL CONSENT.  No authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Servicer of this Agreement, any of the other Facility Documents to which the
Servicer is a party or any other agreement, document or instrument to be
delivered hereunder or thereunder.

               (d)    ENFORCEABILITY OF FACILITY DOCUMENTS.  This Agreement and
each other Facility Document to be delivered by the Servicer in connection
herewith constitute the legal, valid and binding obligation of the Servicer
enforceable against the Servicer in accordance with their respective terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity).

               (e)    NO LITIGATION.  There are no actions, suits or proceedings
pending, or to the knowledge of the Servicer threatened, against or affecting
the Servicer, or the property of the Servicer, in any court, or before any 

<PAGE>

arbitrator of any kind, or before or by any governmental body, which may
materially adversely affect (i) the financial condition of the Servicer or (ii)
the ability of the Servicer to perform its obligations under this Agreement or
any of the other Facility Documents to which the Servicer is a party.  The
Servicer is not in default with respect to any order of any court, arbitrator or
governmental body except for defaults with respect to orders of governmental
agencies which defaults are not material to the business or operations of the
Servicer or the ability of the Servicer to perform its obligations under this
Agreement or under any of the other Facility Documents to which the Servicer is
a party.

               (f)    ACCURACY OF INFORMATION.  No Monthly Report or Purchase
Notice (if prepared by the Servicer), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by the Servicer to
the Funding Agent, PARCO or any APA Bank in connection with this Agreement is or
shall be inaccurate in any material respect as of the date it is or shall be
dated or (except as otherwise disclosed to the Funding Agent, PARCO or any such
APA Bank, as the case may be, at such time or promptly thereafter) as of the
date so furnished, or contains or shall contain any material misstatement of
fact or omits or shall omit to state a material fact or any fact necessary to
make the statements contained therein not materially misleading.

               (g)    LOCK-BOX BANK INFORMATION.  The name and address of the
Lock-Box Bank, together with the location and account number of the Lock-Box, is
specified in Exhibit I (as amended from time to time) hereto (or at such other
Lock-Box Bank and/or with such other Lock-Box as have been notified to the
Funding Agent in accordance with Section 5.3(d) and with respect to which (and
with respect to all Collections to be deposited therein) all action required by
Section 5.3(d) has been taken and completed).

               (h)    CONTRACT FILE COMPLETE.  There exists a Contract File
pertaining to each Purchased Receivable and such Contract File contains, without
limitation, each of the items described in the definition of "Contract File."
Each document contained in the Contract File which is required to be signed by
the Obligor has been signed by the Obligor in the appropriate spaces and all
blanks on any form contained in the Contract File have been properly filled in
and each such form has otherwise been correctly prepared.

               (i)    NO CHANGE IN ABILITY TO SERVICE.  Since January 1, 1998,
there has been no material adverse change in the ability of the Servicer to
service and collect the Receivables, Related Security and Collections.

<PAGE>

               (j)    FINANCIAL CONDITION.  The Servicer is not insolvent or the
subject of any bankruptcy, insolvency, reorganization or similar proceeding.

               (k)    YEAR 2000.  The Servicer and its Subsidiaries have (i)
undertaken a detailed review and assessment of all areas within its business and
operations (including their respective servicing operations) that could be
adversely affected by the failure of the Servicer or its Subsidiaries to be Year
2000 Compliant on a timely basis, (ii) developed a detailed plan and timetable
for becoming Year 2000 Compliant on a timely basis, and (iii) implemented and
will implement that plan in accordance with that timetable in all material
respects. 
<PAGE>

                                      ARTICLE V

                                  GENERAL COVENANTS

          SECTION 5.1 AFFIRMATIVE COVENANTS OF THE SELLER.  From the Effective
Date until the later of the Termination Date or the Final Collection Date, the
Seller will, unless the Funding Agent shall otherwise consent in writing:

               (a)    COMPLIANCE WITH LAWS, ETC.  Comply in all material
respects with all material applicable laws, rules, regulations and orders with
respect to it, its business and properties and all Receivables and related
Contracts.

               (b)    PRESERVATION OF CORPORATE EXISTENCE.  Observe all
corporate procedures required by its Certificate of Incorporation and By-Laws
and preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction where
the failure to preserve and maintain such existence, rights, franchises,
privileges and qualifications would materially adversely affect (i) the
interests hereunder of the Funding Agent, PARCO or the APA Banks, (ii) the
collectibility of any Purchased Receivable or (iii) the ability of the Seller or
the Servicer to perform their respective obligations hereunder.

               (c)    AUDITS. At any time and from time to time upon reasonable
request by prior written notice to the Seller and during regular business hours,
permit the Funding Agent or its respective agents or representatives, (i) to
examine and make copies of and abstracts from all Records, and (ii) to visit the
offices and properties of the Seller for the purpose of examining such Records,
and to discuss matters relating to the Receivables or the Seller's performance
hereunder with any of the officers or employees of the Seller having knowledge
of such matters.  Prior to a Termination Event, the Seller shall bear the costs
and expenses relating to any such examination and visit only one time per year;
the costs of all other examinations and visits prior to a Termination Event
shall be borne by the Funding Agent.  After a Termination Event, the Seller
shall bear the costs and expenses relating to all such examinations and visits
without regard to the frequency thereof.

               (d)    KEEPING OF RECORDS AND BOOKS OF ACCOUNT.  Maintain and
implement (or cause the Servicer to maintain and implement) administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing the Receivables in the event of the destruction of the
originals thereof) 

<PAGE>

and keep and maintain, all documents, books, records and other information
reasonably necessary or advisable for the collection of all Receivables
(including, without limitation, records adequate to permit the daily
identification of all Collections of and adjustments to each Purchased
Receivable).  The original counterpart of each Contract subject to a Purchase
hereunder shall be delivered to the Servicer and all other Records relating
thereto shall be held by the Servicer segregated from any similar documents.

               (e)    PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS.
At its expense timely and fully perform and comply, in all material respects,
with all material provisions, covenants and other promises required to be
observed by it under the Contracts related to the Purchased Receivables.

               (f)    LOCATION OF RECORDS.  Keep its chief place of business and
chief executive office, and the offices where it keeps the Records, at the
addresses referred to in Section 4.1(i), or, in any such case, upon thirty (30)
days' prior written notice to the Funding Agent, at such other locations within
the United States where all action required by Section 6.5 shall have been taken
and completed. 
 
               (g)    CREDIT AND COLLECTION POLICIES.  Without limiting the
requirements of Section 5.3(b), comply and cause the Servicer to comply in all
material respects with the Credit and Collection Policy and the Additional
Credit Guidelines in regard to each Purchased Receivable and the related
Contract.

               (h)    COLLECTIONS. Instruct all Obligors (or cause the Servicer
to instruct all Obligors) to cause all Collections to be mailed directly to the
Lock-Box and if the Seller shall receive any Collections (including, without
limitation, any Collections deemed to have been received pursuant to Section
8.2), the Seller shall remit such Collections to the Collection Account within
one (1) Business Day following the Seller's receipt thereof.

               (i)    POSTING OF COLLECTIONS AND RECEIVABLES.  Apply (or cause
the Servicer to apply) all Collections to the applicable Receivables pursuant to
the terms of Section 6.6 and modify its general trial balance to reflect such
Collections, in each case, within one (1) Business Day following the Seller's or
the Servicer's receipt of information in respect of such Collections, but in no
event more than three (3) Business Days after the earliest date on which such
Collections are deposited with the Lock-Box Bank or otherwise received by the
Servicer or the Seller.

               (j)    FACILITY DOCUMENTS.  Comply in all material respects with
the terms of and employ the procedures outlined in and enforce the obligations
of the Originator under the Receivables Purchase Agreement and all of the other
Facility Documents to which it is a party, take all such action to such end as
may be 

<PAGE>

from time to time reasonably requested by the Funding Agent, maintain all such
Facility Documents in full force and effect and make to any party to the
Receivables Purchase Agreement such reasonable demands and requests for
information and reports or for action as the Seller is entitled to make
thereunder and as may be from time to time reasonably requested by the Funding
Agent.

               (k)    SEPARATE CORPORATE EXISTENCE.  Take all reasonable steps
(including, without limitation, all steps that the Funding Agent may from time
to time reasonably request) to maintain the Seller's identity as a separate
legal entity from the Originator and to make it manifest to third parties that
the Seller is an entity with assets and liabilities distinct from those of the
Originator and each other Affiliate thereof.  Without limiting the generality of
the foregoing and in addition to and consistent with the covenants set forth in
Sections 5.1(b) and 5.3(m), the Seller shall:

                    (i)     conduct business correspondence in its own name,
          hold regular meetings of, or obtain regular written consents from, its
          Board of Directors and maintain appropriate books and records;

                    (ii)    not permit any limitation on the authority of its
          own directors and officers to conduct its business and affairs in
          accordance with their independent business judgment, or authorize or
          suffer any Person other than its own directors and officers to act on
          its behalf with respect to matters (other than matters customarily
          delegated to others under powers of attorney) for which a
          corporation's own directors and officers would customarily be
          responsible;

                    (iii)   maintain or cause to be maintained by an agent of
          the Seller under the Seller's control physical possession of all its
          books and records;

                    (iv)    maintain capitalization adequate for the conduct of
          its business;

                    (v)     account for and manage its liabilities separately
          from those of any other Person, including, without limitation, payment
          of all payroll and other administrative expenses and taxes from its
          own assets;
<PAGE>

                    (vi)    segregate and identify separately all of its assets
          from those of any other Person (other than the commingling of
          Collections of Receivables as contemplated by the Receivables Purchase
          Agreement and this Agreement);

                    (vii)   maintain offices through which its business is
          conducted separate from those of the Originator and any Affiliates of
          the Originator and any Affiliates of the Seller (provided that, to the
          extent that the Seller and any of its Affiliates have offices in the
          same location, there shall be a fair and appropriate allocation of
          overhead costs and expenses among them, and each such entity shall
          bear its fair share of such expenses);

                    (viii)  not commingle its funds with those of the Originator
          or any Affiliate of the Originator or any Affiliates of the Seller
          except to the extent contemplated herein, or use its funds for other
          than the Seller's uses; and

                    (ix)    ensure that any financial reports required of the
          Seller shall comply with generally accepted accounting principles and
          shall be issued separately from, but may be consolidated with, any
          reports prepared by any of its Affiliates.

               (l)    INTEREST RATE HEDGES.  Maintain, at all times, either (i)
Interest Rate Hedges (A) between the Seller and a bank or other financial
institution whose long-term rating is at least A from S&P and A2 from Moody's
and whose short-term unsecured debt obligation rating is at least A-1/P-1 by S&P
and Moody's, respectively, and is reasonably acceptable to the Funding Agent
(with copies to the Rating Agencies of any Interest Rate Hedge entered into with
a counterparty other than the Funding Agent), (B) with a notional principal
amount not less than the Net Investment, which notional principal amount may
amortize with a final maturity date that is no earlier than the final scheduled
payment date with respect to the last maturing Purchased Receivable included in
such Incremental Purchase, and (C) which, if an interest rate cap, has a strike
price no greater than the Maximum Interest Rate Cap Strike Price and which
requires such counterparty to make monthly payments, if any, to the Collection
Account; PROVIDED that, with respect to any Interest Rate Hedge entered into
after the initial Interest Rate Hedge, consent of the Rating Agencies shall not
be required if such Interest Rate Hedge is similar in all material respects to
the immediately preceding Interest Rate Hedge, or (ii) any other hedging
mechanism in form and substance reasonably acceptable to the Funding Agent and
the Rating Agencies.

               (m)    LOCAL COUNSEL OPINIONS.  In the event the aggregate

<PAGE>

Outstanding Balance of all Receivables included in the Servicing Portfolio
Balance having Obligors with mailing addresses in the same state exceeds 10% of
the Outstanding Balance of all Receivables included in the Servicing Portfolio
Balance, obtain from counsel in such state an opinion (or a reliance letter) in
form and substance acceptable to each Funding Agent with respect to the
requirements in such state for the assignment of a security interest in a
Financed Vehicle.

          SECTION 5.2 REPORTING REQUIREMENTS OF THE SELLER.  From the Effective
Date until the later of the Termination Date or the Final Collection Date, the
Seller will, unless the Funding Agent shall otherwise consent in writing,
furnish to the Funding Agent:

               (a)    as soon as available and in any event within 120 days
after the end of the Seller's fiscal year, a copy of its unaudited financial
statements for such year and a balance sheet for the twelve month period then
ended, a statement of income of the Seller for such fiscal year, together with
comparative information for the previous fiscal year, and copies of all reports
and management letters, if any, from the independent certified public
accountants to the Seller, which reports and letters shall be reasonably
satisfactory to the Funding Agent, all certified by the chief financial officer
of the Seller;

               (b)    as soon as possible and in any event within five Business
Days after the occurrence of each Termination Event or each event which, with
the giving of notice or lapse of time or both, would constitute an Termination
Event, the statement of the chief financial officer, chief accounting officer or
treasurer of the Seller setting forth details of such Termination Event or event
and the action which the Seller proposes to take with respect thereto; 

               (c)    promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the conditions or
operations, financial or otherwise, of the Seller as the Funding Agent may from
time to time reasonably request in order to protect the interests of the Funding
Agent, PARCO or any APA Banks under or as contemplated by this Agreement.

Notwithstanding the foregoing, with respect to paragraphs (a) and (b) of this
Section 5.2, the Seller shall be deemed not to be in default with respect to the
specified delivery date if such default is cured within thirty (30) days.

          SECTION 5.3 NEGATIVE COVENANTS OF THE SELLER.  From the Effective Date
until the later of the Termination Date or the Final Collection Date, the Seller
<PAGE>

will not, without the written consent of the Funding Agent:

               (a)    SALES, LIENS, ETC., AGAINST RECEIVABLES AND RELATED
ASSETS.  Except as otherwise provided herein or in the other Facility Documents,
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist, any Lien upon or with respect to, any Purchased
Receivable, Related Security or Collections, or any related Contract, or upon or
with respect to the Collection Account or the Lock-Box Account or assign any
right to receive income in respect thereof.

               (b)    EXTENSION OR AMENDMENT OF PURCHASED RECEIVABLES.  Except
as expressly contemplated by the Credit and Collection Policy and/or the
Additional Credit Guidelines, compromise, extend, release or adjust payments on
any Contracts or Receivables, accept a conveyance of a Financed Vehicle in full
or partial satisfaction of any Contract or Receivable, or release the Lien noted
on any Title to any Financed Vehicle securing any Receivable, or allow the
Servicer to do any of the foregoing.

               (c)    CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY.  Make
any change in the character of its business or make or allow to be made any
material change in the Credit and Collection Policy without prior notice to and
approval by the Funding Agent (which approval shall not be unreasonably
withheld); PROVIDED, HOWEVER, that the Funding Agent will be deemed to have
approved any such change unless it shall have disapproved of such change within
ten (10) Business Days of its receipt of such notice; the Seller shall provide
the Rating Agencies with copies of any notices which contain change to the
Credit and Collection Policy.

               (d)    CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS.  Amend the
Lock-Box Agreement (except to add additional Program Parties (as defined
therein)) or terminate Harris Trust and Savings Bank (or any successor and
assign) as the Lock-Box Bank or make or allow to be made any change in its or
the Servicer's instructions to Obligors regarding payments to be made to the
Seller or payments to be made to the Lock-Box Bank, unless the Funding Agent
shall have received (i) ten Business Days' prior notice of such amendment,
termination or change and (ii) prior to the effective date of such amendment,
termination or change, an executed copy of the amended Lock-Box Agreement
executed by the Lock-Box Bank, the Funding Agent, AFL and the Seller.

               (e)    STOCK, MERGER, CONSOLIDATION, ETC.  Merge or consolidate
with or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to, acquire all or
substantially all of the assets of, any Person or division of any Person, except
as expressly permitted under the terms of this Agreement.

<PAGE>

               (f)    CHANGE IN CORPORATE NAME.  Make any change to its
corporate name or use any trade names, fictitious names, assumed names or "doing
business as" names.

               (g)    ERISA MATTERS.  Establish any Plan, Multiemployer Plan or
Benefit Plan.

               (h)    INDEBTEDNESS.  Incur, create, assume, suffer to exist or
otherwise become liable with respect to any Indebtedness other than (i) under
the Facility Documents or any Permitted Securitization Transaction and (ii)
other Indebtedness for operational expenses of the Seller in an amount not to
exceed $9,750 at any one time outstanding.

               (i)    GUARANTEES.  Guarantee, endorse or otherwise be or become
contingently liable (including by agreement to maintain balance sheet tests) in
connection with the obligations of any other Person, except endorsements of
negotiable instruments for collection in the ordinary course of business and
reimbursement or indemnification obligations in favor of the Funding Agent,
PARCO, the APA Banks or any Affected Party as provided for under this Agreement.

               (j)    LIMITATION ON TRANSACTIONS WITH AFFILIATES.  Enter into,
or be a party to any transaction with any Affiliate of the Seller, except for
(i) the transactions contemplated by the Facility Documents and (ii) to the
extent not otherwise prohibited under this Agreement, other transactions in the
nature of employment contracts and directors' fees, upon fair and reasonable
terms materially no less favorable to the Seller than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate.

               (k)    FACILITY DOCUMENTS.  Cancel or terminate the Receivables
Purchase Agreement, or consent to or accept any cancellation or termination of
any of such agreements; or amend or otherwise modify any term or condition of
the Receivables Purchase Agreement or give any consent, waiver or approval under
any such agreement; or waive any default under or breach of the Receivables
Purchase Agreement or take any other action under any such agreement not
required by the terms thereof.

               (l)    CHARTER AND BY-LAWS. Amend, modify or otherwise change any
of the terms or provisions in its certificate of incorporation, its by-laws, 
<PAGE>

any document setting forth the designation, amount, relative rights, limitations
and preferences of any class or series of its capital stock, and in each case,
any equivalent documents, as in effect on the date hereof, without the prior
written consent of the Funding Agent.

               (m)    ACCOUNTING TREATMENT.  Prepare any financial statements or
other statements (including any tax filings which are not consolidated with
those of the Originator) which shall account for the transactions contemplated
by the Receivables Purchase Agreement in any manner other than as the sale of,
or a capital contribution of, the Contracts, the Receivables and the related
assets by the Originator to the Seller.

               (n)    LIMITATION ON INVESTMENTS.  Make or suffer to exist any
loans or advances to, or extend any credit to, or make any investments (by way
of transfer of property, contributions to capital, purchase of stock or
securities or evidences of indebtedness, acquisition of the business or assets,
or otherwise) in, any Affiliate or any other Person except as otherwise
permitted herein and pursuant to the Receivables Purchase Agreement.

          SECTION 5.4 COVENANTS OF THE SERVICER.

               (a)    AFFIRMATIVE COVENANTS OF THE SERVICER.  From the Effective
Date until the later of the Termination Date or the Final Collection Date, the
Servicer will, unless the Funding Agent shall otherwise consent in writing:

                    (i)     COMPLIANCE WITH LAWS, ETC.  Comply in all material
          respects with all applicable laws, rules, regulations and orders with
          respect to it, its business and properties and all Receivables and
          related Contracts.

                    (ii)    PRESERVATION OF EXISTENCE.  Observe all procedures
          required by its organizational documents and by-laws and preserve and
          maintain its existence, rights, franchises and privileges in the
          jurisdiction of its incorporation, and qualify and remain qualified in
          good standing in each jurisdiction where the failure to preserve and
          maintain such existence, rights, franchises, privileges and
          qualifications would materially adversely affect (1) the interests
          hereunder of the Funding Agent, PARCO or the APA Banks, (2) the
          collectibility of any Purchased Receivable or (3) its ability to
          perform its obligations hereunder.

                    (iii)   AUDITS.  At any time and from time to time upon
          reasonable request by prior written notice to the Servicer and during
          regular business hours, permit the Funding Agent or its

<PAGE>

          respective agents or representatives, (1) to examine and make copies
          of and abstracts from all Records, and (2) to visit the offices and
          properties of the Servicer for the purpose of examining such Records,
          and to discuss matters relating to the Receivables or the Servicer's
          performance hereunder with any of the officers or employees of the
          Servicer having knowledge of such matters.  Prior to a Termination
          Event, the Servicer shall bear the costs and expenses relating to any
          such examination and visit only one time per year; the costs of all
          other examinations and visits prior to a Termination Event shall be
          borne by the Funding Agent.  After a Termination Event, the Servicer
          shall bear the costs and expenses relating to all such examinations
          and visits without regard to the frequency thereof.

                    (iv)    KEEPING OF RECORDS AND BOOKS OF ACCOUNT.  Maintain
          and implement administrative and operating procedures (including,
          without limitation, an ability to recreate records evidencing the
          Purchased Receivables in the event of the destruction of the originals
          thereof) and keep and maintain, all documents, books, records and
          other information reasonably necessary or advisable for the collection
          of all Purchased Receivables (including, without limitation, records
          adequate to permit the daily identification of all Collections of and
          adjustments to each Purchased Receivable).  AFL, as Servicer, hereby
          covenants that the original counterpart of each Contract subject to a
          Purchase hereunder shall be delivered to the Servicer and all other
          Records relating thereto shall be marked electronically to segregate
          such Records from any similar documents.

                    (v)     PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND
          CONTRACTS.  At its expense timely and fully perform and comply, in all
          material respects, with all material provisions, covenants and other
          promises required to be observed by it under any Contract related to a
          Purchased Receivable (except, in the case of a successor Servicer,
          such material provisions, covenants and other provisions shall only
          include those provisions relating to the collection and servicing of
          the Purchased Receivables to the extent such obligations are set forth
          in a document included in the related Contract File).

                    (vi)    CREDIT AND COLLECTION POLICIES.  Comply in all
          material respects with its Credit and Collection Policy and/or the
          Additional Credit Guidelines in regard to each Purchased Receivable 
<PAGE>

          and the related Contract, including, without limitation, the taking of
          such steps as are necessary to maintain perfection, free and clear of
          all equal or prior Liens, of the security interest created by each
          such Contract in the related Financed Vehicle on behalf of the Funding
          Agent, PARCO and the APA Banks.

                    (vii)   COLLECTIONS.  Instruct all Obligors to cause all
          Collections to be mailed directly to the Lock-Box and, within one (1)
          Business Day after receipt into the Lock-Box, remit all such
          Collections to the Lock-Box Account and, within two (2) days of
          receipt into the Lock-Box, remit all Collections to the Collection
          Account.

                    (viii)  POSTING OF COLLECTIONS AND RECEIVABLES.  Apply all
          Collections to the applicable Purchased Receivables pursuant to the
          terms of Section 6.6 within one Business Day following the Seller's or
          the Servicer's receipt of information in respect of such Collections
          but in no event more than two Business Days after the earliest date on
          which such Collections are deposited with the Lock-Box Bank or
          otherwise received by the Servicer or the Seller.

                    (ix)    FACILITY DOCUMENTS.  Comply in all material respects
          with the terms of and employ the procedures outlined in the
          Receivables Purchase Agreement, and all of the other Facility
          Documents to which it is a party and take all such action to such end
          as may be from time to time reasonably requested by the Funding Agent.

                    (x)     QUARTERLY REVIEWS.  Following the end of each
          calendar quarter in each fiscal year in which PARCO or the APA Banks
          have acquired an interest in Purchased Receivables, the Servicer shall
          cause a firm of nationally recognized independent certified public
          accountants to undertake an integrity review in accordance with
          Schedule I attached hereto, as such Schedule I shall be amended by
          agreement of the Seller and the Funding Agent from time to time.  The
          report of such accountants on the results of each such data integrity
          review shall be completed and delivered to the Funding Agent, the
          Servicer and the Seller within twenty (20) days of the end of each
          such calendar quarter.

               (b)    REPORTING REQUIREMENTS OF THE SERVICER.  From the
Effective Date until the later of the Termination Date or the Final Collection
Date, the Servicer will, unless the Funding Agent shall otherwise consent in
writing, furnish to the Funding Agent:
<PAGE>

                    (i)     As soon as available and in any event within
          forty-five (45) days after the end of each calendar quarter in each
          fiscal year, consolidated balance sheets of the Servicer and its
          Subsidiaries as of the end of such quarter and consolidated statements
          of income of the Servicer and its Subsidiaries for such quarter and
          for the period commencing at the end of the previous fiscal year and
          ending with the end of such quarter, certified by the chief financial
          officer of the Servicer.

                    (ii)    As soon as available and in any event within 120
          days after the end of the Servicer's fiscal year, a copy of its
          audited consolidated financial statements for such year and audited
          consolidated balance sheets for the twelve month period then ended,
          audited consolidated statements of income, cash flow and changes in
          shareholder equity of the Servicer and its Subsidiaries for such
          fiscal year, together with comparative information for the previous
          fiscal year, and copies of all reports and management letters, if any,
          from the independent certified public accountants to the Servicer,
          which reports and letters shall be reasonably satisfactory to the
          Funding Agent, all certified by the chief financial officer of the
          Servicer, accompanied by a statement, addressed to the Funding Agent
          and the Back-Up Servicer, of the accountants that conducted the audit
          of the foregoing to the effect that: (A) such audit was made in
          accordance with generally accepted auditing standards, and accordingly
          included such tests of the accounting records and such other auditing
          procedures as such accountants considered necessary in the
          circumstances, and (B) such accountants are independent of the Seller
          and the Servicer within the meaning of the Code of Professional Ethics
          of the American Institute of Certified Public Accountants.

                    (iii)   As soon as possible and in any event within five
          Business Days after the occurrence of each Termination Event or each
          event which, with the giving of notice or lapse of time or both, would
          constitute an Termination Event, a notice setting forth details of
          such Termination Event or event.

                    (iv)    As soon as possible and in any event within five
          Business Days after the occurrence of each Servicer Termination Event
          or each event which, with the giving of notice or lapse of time 

<PAGE>

          or both, would constitute a Servicer Termination Event, the statement
          of the chief financial officer, chief accounting officer or treasurer
          of the Servicer setting forth details of such Servicer Termination
          Event or event and the action which the Servicer proposes to take with
          respect thereto.

                    (v)     Promptly, from time to time, such other information,
          documents, records or reports within its possession respecting the
          Receivables or the conditions or operations, financial or otherwise,
          of the Servicer as the Funding Agent may from time to time reasonably
          request in order to protect the interests of the Funding Agent, PARCO
          or any APA Bank under, or as contemplated by, this Agreement.

                    (vi)    As soon as available and in any event within 120
          days after the end of the Servicer's fiscal year, an Officer's
          Certificate, dated as of the last day of the previous fiscal year,
          stating that (A) a review of the activities of the Servicer during the
          previous 12-month period (or such other period as shall have elapsed
          from the Closing Date to the date of the first such certificate) and
          of its performance under this Agreement has been made under such
          officer's supervision, and (B) to such officer's knowledge, based on
          such review, the Servicer has fulfilled all its obligations under this
          Agreement throughout such period, or, if there has been a default in
          the fulfillment of any such obligation, specifying each such default
          known to such officer and the nature and status thereof.

                    (vii)   On or before each Determination Date, the Servicer
          will deliver to the Back-Up Servicer a computer tape and a diskette
          (or any other electronic transmission acceptable to the Funding Agent
          and the Back-Up Servicer) in a format acceptable to the Back-Up
          Servicer containing the information with respect to the Purchased
          Receivables as of the last day of the related Settlement Period
          necessary for preparation of the Monthly Report for the related
          Determination Date and necessary to determine the application of
          collections as provided in Section 2.5.  The Back-Up Servicer shall
          use such tape or diskette (or other electronic transmission acceptable
          to the Funding Agent and the Back-Up Servicer)  to verify the Monthly
          Report delivered by the Servicer, and the Back-Up Servicer shall
          certify to the Funding Agent that it has verified the Monthly Report
          in accordance with this Section 5.4(b)(vii) and shall notify the
          Servicer and the Funding Agent of any discrepancies, in each case, on
          or before the second Business Day following such Determination Date. 
          In the event that the Back-Up Servicer and the Servicer are 

<PAGE>

          unable to reconcile discrepancies with respect to a Monthly Report by
          the related Settlement Date, the Servicer shall cause a firm of
          nationally recognized independent certified public accountants, at the
          Servicer's expense, to audit the Monthly Report and, prior to the next
          succeeding Determination Date, reconcile the discrepancies.  The
          effect, if any, of such reconciliation shall be reflected in the
          Monthly Report for the next succeeding Determination Date.


                    (viii)  Upon the reasonable request of the Back-Up Servicer,
          the Servicer shall provide a computer tape (or any other electronic
          transmission acceptable to the Funding Agent and the Back-Up Servicer)
          containing all data maintained by the Servicer in connection with the
          servicing of Purchased Receivables.

Notwithstanding the foregoing, (A) with respect to clauses (i), (ii) and (vi) of
this Section 5.2(b), the Servicer shall be deemed not to be in default with
respect to the specified delivery date if such default is cured within thirty
(30) days and (B) with respect to clause (vii) of this Section 5.2(b), the
Servicer shall be deemed not to be in default with respect to the specified
delivery date of the computer tapes and diskettes referred to in such clause if
such default is cured within one (1) Business Day.

               (c)    NEGATIVE COVENANTS OF THE SERVICER.  From the Effective
Date until the later of the Termination Date or the Final Collection Date, the
Servicer will not, without the written consent of the Funding Agent:

                    (i)     EXTENSION OR AMENDMENT OF RECEIVABLES.  Except as
          otherwise expressly contemplated by the Credit and Collection Policy
          and/or the Additional Credit Guidelines, compromise, extend, release
          or adjust payments on any Contracts or Receivables, accept a
          conveyance of a Financed Vehicle in full or partial satisfaction of
          any Contract or Receivable, or release the Lien noted on any Title to
          any Financed Vehicle securing any Receivable.

                    (ii)    CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. 
          Make any material change in the character of its business or in the
          Credit and Collection Policy without prior notice to and approval by
          the Funding Agent; PROVIDED, HOWEVER, that the Funding Agent will be
          deemed to have approved any such change unless it shall have
          disapproved of such change within ten (10) Business Days of its
          receipt of such notice.
<PAGE>

                    (iii)   CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS.  Amend
          the Lock-Box (except to add additional Program Parties (as defined
          therein)) Agreement or terminate Harris Trust and Savings Bank (or any
          successor or assign) as the Lock-Box Bank or make any change in its
          instructions to Obligors regarding payments to be made to the Seller
          or payments to be made to Lock-Box Bank, unless the Funding Agent
          shall have received (A) ten (10) Business Days' prior notice of such
          amendment, termination or change and (B) prior to the effective date
          of such amendment, termination or change, an executed copy of the
          Lock-Box Agreement executed by the Lock-Box Bank, the Funding Agent,
          AFL and the Seller.

                    (iv)    ERISA.  So long as the Servicer is AFL or an
          Affiliate thereof, (1) engage or permit any ERISA Affiliate to engage
          in any prohibited transaction for which an exemption is not available
          or has not previously been obtained from the Department of Labor; (2)
          permit to exist any accumulated funding deficiency, as defined in
          Section 302(a) of ERISA and Section 412(a) of the IRC, or funding
          deficiency with respect to any Benefit Plan other than a Multiemployer
          Plan; (3) fail to make any payments to any Multiemployer Plan that the
          Servicer or any ERISA Affiliate may be required to make under the
          agreement relating to such Multiemployer Plan or any law pertaining
          thereto; (4) terminate any Benefit Plan so as to result in any
          material risk of liability of the Servicer, the Seller or any ERISA
          Affiliate under ERISA or the IRC; or (5) permit to exist any
          occurrence of any reportable event described in Title IV of ERISA
          which represents a material risk of a liability of the Servicer, the
          Seller or any ERISA Affiliate under ERISA or the IRC.
<PAGE>
                                      ARTICLE VI

                            ADMINISTRATION AND COLLECTION

          SECTION 6.1 RETENTION AND TERMINATION OF SERVICER.

               (a)    The servicing, administering and collection of the
Receivables shall be conducted by the Person (the "SERVICER") so designated from
time to time in accordance with this Section 6.1.  Subject to termination due to
the occurrence of a Servicer Termination Event or as otherwise provided below in
this Section 6.1, AFL shall serve as Servicer hereunder.  The Funding Agent
shall, upon ten (10) Business Days' prior written notice following the
occurrence of a Servicer Termination Event, terminate the appointment of the
Servicer by designating as Servicer the Back-Up Servicer, or, in the case of the
termination of the Back-Up Servicer, any other Person as successor Servicer. 
Any designation of a successor Servicer (including the Back-Up Servicer)
hereunder shall become effective upon such successor Servicer's agreement to
perform the duties and obligations of the Servicer pursuant to the terms hereof,
and such person shall, for the purposes of this Agreement, become Servicer.  The
Servicer may, with the prior consent of the Funding Agent, subcontract with any
other Person for servicing, administering or collecting the Purchased
Receivables; PROVIDED that the Servicer shall remain liable for the performance
of the duties and obligations of the Servicer pursuant to the terms hereof.  

               (b)    Upon any successor Servicer's assumption of the
obligations of Servicer pursuant to this Agreement, the Servicer shall deliver
to such successor Servicer all documents and instruments and monies held by it
under this Agreement; and the Servicer and the Funding Agent shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Servicer all
such rights, powers, duties, and obligations.

               (c)    The Servicer shall not resign from the obligations and
duties imposed on it by this Agreement as Servicer except upon a determination
that by reason of a change in legal requirements, the performance of its duties
hereunder would cause it to be in violation of such legal requirements in a
manner which would have a material adverse effect on the Servicer, and the
Funding Agent does not elect to waive the obligations of the Servicer to perform
the duties which render it legally unable to act or to delegate those duties to
another Person.  Any such determination permitting the resignation of the
Servicer pursuant to this Section 6.1(c) shall be evidenced by an opinion of
counsel as to the relevant legal requirements delivered and acceptable to the
Funding Agent in form and substance.

               (d)    Any Person (i) into which the Servicer may be merged or

<PAGE>

consolidated, (ii) resulting from any merger or consolidation to which the
Servicer shall be a party, (iii) which acquires by conveyance, transfer or lease
substantially all of the assets of the Servicer, or (iv) succeeding to the
business of the Servicer, shall execute an agreement of assumption to perform
every obligation of the Servicer under this Agreement and, whether or not such
assumption agreement is executed, shall be the successor to the Servicer under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties to this Agreement, anything in this Agreement
to the contrary notwithstanding; PROVIDED, HOWEVER, that nothing contained
herein shall be deemed to release the Servicer from any obligation.

               (e)    In the event any successor Servicer assumes the
obligations of the Servicer pursuant to this Section 6.1, such successor
Servicer shall also thereupon so assume all of the rights and obligations of the
outgoing Servicer under the Lock-Box Agreement.  In such event, such successor
Servicer shall be deemed to have assumed all  of the Servicer's interest therein
and to have replaced the Servicer as a party to the Lock-Box Agreement to the
same extent as if the Lock-Box Agreement had been assigned to such successor
Servicer, except that the Servicer shall not thereby be relieved of any
liability or obligations to the Lock-Box Bank under such Lock-Box Agreement. 
The Servicer shall, upon request of the Funding Agent, but at the expense of the
Servicer, deliver to any successor Servicer all documents and  records relating
to the Lock-Box Agreement and an accounting of amounts collected and held by the
Lock-Box Bank and otherwise use its best efforts to effect the orderly and
efficient transfer of the Lock-Box Agreement to any such successor Servicer.

               (f)    If any Person assumes the role of successor Servicer,
(A) such successor Servicer may appoint a subservicer to perform its duties and
obligations as successor Servicer or outsource any of its duties and obligations
as successor Servicer (PROVIDED that no such delegation or outsourcing shall
relieve such successor Servicer of its obligations as the successor Servicer)
and (B) such successor Servicer shall, by the thirtieth (30th) day following the
day of such assumption of duties, obtain all licenses, approvals and consents
necessary or required to be obtained in connection with the performance of its
obligations as successor Servicer hereunder.

          SECTION 6.2 DUTIES OF THE SERVICER.

               (a)    The Servicer shall take or cause to be taken all such
actions as may be necessary or advisable to collect each Purchased Receivable
from time to 

<PAGE>

time, all in accordance with applicable laws, rules and regulations, with 
reasonable care and diligence, and in accordance with the Credit and 
Collection Policy and/or the Additional Credit Guidelines.  Each of the 
Seller, PARCO, the APA Banks and the Funding Agent hereby appoints as its 
agent the Servicer, from time to time designated pursuant to Section 6.1, to 
enforce its respective rights and interests in and under the Purchased 
Receivables, the Related Security and the related Contracts.  The Servicer 
(so long as it is AFL) will at all times apply the same standards and follow 
the same procedures with respect to the decision to commence litigation, and 
in prosecuting and litigating with respect to Purchased Receivables as it 
applies and follows with respect to Receivables which are not Purchased 
Receivables.  In no event shall the Servicer be entitled to make the Funding 
Agent, PARCO or any APA Bank a party to any litigation referred to in the 
immediately preceding sentence without such Person's express prior written 
consent.  The Servicer shall cause all Collections of Purchased Receivables 
deposited in the Lock-Box to be transferred to the Lock-Box Account within 
one (1) day of receipt into the Lock-Box and to the Collection Account within 
two (2) Business Days of receipt into the Lock-Box Account (or, following a 
Servicer Termination Event, one (1) Business Day).  The Servicer shall also, 
in no event later than two (2) Business Days (or, after a Servicer 
Termination Event, one (1) Business Day) after receipt, transfer to the 
Collection Account any and all Collections of Purchased Receivables received 
by the Servicer and, prior to such transfer, shall hold such amounts in trust 
for the benefit of PARCO and APA Banks.  Provided that the Termination Date 
shall not have occurred, the Servicer, may, in accordance with the express 
provisions of the Credit and Collection Policy and/or the Additional Credit 
Guidelines and in the ordinary course of business, amend, modify or waive any 
term or condition of any Contract relating to any Purchased Receivable.  The 
Seller shall deliver to the Servicer, and the Servicer shall hold in trust 
for the benefit of Seller, PARCO and the APA Banks in accordance with their 
respective interests, all Records.

               (b)    The Servicer shall, as soon as practicable following
receipt, turn over to the Seller the Collections of any Receivable which is not
a Purchased Receivable less, in the event AFL is not the Servicer, all
reasonable and appropriate out-of-pocket costs and expenses of such Servicer of
servicing, collecting and administering the Receivables to the extent not
covered by the Servicing Fee received by it.  The Servicer, if other than AFL,
shall as soon as practicable upon demand deliver to the Seller all Records in
its possession relating to Receivables of the Seller other than Purchased
Receivables, and copies of Records in its possession relating to Purchased
Receivables.  The Servicer's authorization under this Agreement shall terminate
after the Termination Date on the Final Collection Date.

               (c)    Notwithstanding anything to the contrary contained in this
Article VI, the Servicer, if the Funding Agent or its applicable designee, shall
have no obligation to collect, enforce or take any other action described in
this Article VI  with respect to any Receivable that is not a Purchased
Receivable other than to 

<PAGE>

deliver to the Seller the Collections and documents with respect to any such
Receivable that is not a Purchased Receivable as described in the first two
sentences of Section 6.2(b) and to exercise the same degree of care with respect
to Collections and documents in its possession as it would with respect to its
own property.

          SECTION 6.3 RIGHTS OF THE FUNDING AGENT.

               (a)    At any time and from time to time the Seller (or the
Servicer) shall, at the Funding Agent's reasonable request, segregate all cash,
checks and other instruments received by it from time to time constituting
Collections of Purchased Receivables in a manner reasonably acceptable to the
Funding Agent and shall, promptly upon receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer, to the
Funding Agent or its designee.

               (b)    At any time following the designation of a Servicer other
than AFL pursuant to Section 6.1:

                            (i)     At the direction of the Funding Agent, the
               Servicer shall notify at any time the Obligors of Purchased
               Receivables, or any of them, of PARCO' and the APA Banks'
               interests in Purchased Assets and direct such Obligors, or any of
               them, that payment of all amounts payable under any Purchased
               Receivable be made directly to the Funding Agent or its designee.

                            (ii)    The Servicer or the Seller shall (or shall
               cause), at the Funding Agent's request and at the Seller's
               expense, give notice of PARCO's and the APA Banks' interest in
               Purchased Receivables to each Obligor and direct that payments be
               made directly to the Funding Agent or its designee.

                            (iii)   Each of the Seller, the Funding Agent, PARCO
               and the APA Banks hereby authorizes the Funding Agent to take any
               and all steps in the Seller's name and on behalf of the Seller,
               the Funding Agent, PARCO and the APA Banks necessary or
               desirable, in the determination of the Funding Agent, to collect
               all amounts due under any and all Purchased Receivables,
               including, without limitation, endorsing the Seller's name on
               checks and other instruments representing Collections and
               enforcing such Receivables and the related Contracts.

<PAGE>

          SECTION 6.4 RESPONSIBILITIES OF THE SELLER.  Anything herein to the
contrary notwithstanding, the Seller shall pay when due any taxes including,
without limitation, sales, excise and personal property taxes payable in
connection with the Purchased Receivables, unless the Seller is contesting the
payment of such taxes in good faith and by appropriate proceedings.

          SECTION 6.5 FURTHER ACTION EVIDENCING PURCHASES. The Seller agrees
that from time to time, at its expense, it will promptly execute and deliver all
further instruments and documents necessary or advisable, and take all further
action that the Funding Agent may reasonably request, in order to perfect,
protect or more fully evidence its interest in the Purchased Assets, or to
enable PARCO, the APA Banks or the Funding Agent to exercise or enforce any of
their respective rights hereunder.  Without limiting the generality of the
foregoing, the Seller will (i) mark its master data processing records
evidencing such Purchased Receivables and related Contracts with a legend,
acceptable to the Funding Agent, evidencing that the Funding Agent, on behalf of
PARCO and the APA Banks, has acquired an interest therein as provided in this
Agreement and (ii) upon the request of the Funding Agent), execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate or as the  Funding Agent may reasonably request.  The Seller hereby
authorizes the Funding Agent to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all or
any of the Purchased Assets now existing or hereafter arising without the
signature of the Seller where permitted by law.  A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the Purchased
Assets, or any part thereof, shall be sufficient as a financing statement.  If
the Seller fails to perform any of its agreements or obligations under this
Agreement, the Funding Agent may (but shall not be required to) itself perform,
or (at the direction of the Funding Agent) cause performance of, such agreement
or obligation, and the expenses of the Funding Agent incurred in connection
therewith shall be payable by the Seller upon the Funding Agent's demand
therefor; PROVIDED, HOWEVER, prior to taking any such action, the Funding Agent
shall give notice of such intention to the Seller and provide the Seller with a
reasonable opportunity to take such action itself.

          SECTION 6.6 APPLICATION OF PAYMENTS.  To the extent the Servicer
receives a payment from an Obligor of a Purchased Receivable with respect to
which the Obligor has not identified the Receivable to which such payment should
be applied (a payment in the exact amount of an outstanding invoice being
sufficient identification), the Servicer shall use its best efforts to contact
such Obligor to confirm the Receivable to which such Obligor intended that such
payment be applied.

          SECTION 6.7 CONSEQUENCES OF A SERVICER TERMINATION EVENT.  If a
Servicer Termination Event shall occur and be continuing, the Funding Agent, by
ten 

<PAGE>

(10) days' prior notice given in writing to the Servicer and subject to Section
6.1(a), may terminate the then current Servicer as Servicer under this
Agreement.  Each successor Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf, and at the expense, of the prior
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and Related Security or
otherwise.  The prior Servicer agrees to cooperate with any successor Servicer
in effecting the termination of the responsibilities and rights of the prior
Servicer under this Agreement, including, without limitation, the transfer to
any successor Servicer for administration by it of all cash amounts that shall
at the time be held by the prior Servicer or that are thereafter received with
respect to the Receivables and the delivery to any successor Servicer of all
Contract Files and Records and a computer tape (or a diskette or any other
electronic transmission acceptable to the Funding Agent and the successor
Servicer) in readable form containing all information necessary to enable such
successor Servicer to service the Receivables and Related Security.  The Funding
Agent and any successor Servicer may set off and deduct any amounts owed by the
terminated Servicer from any amounts payable to the terminated Servicer.  The
terminated Servicer shall grant the Funding Agent and any successor Servicer
(including the Back-Up Servicer) reasonable access to the terminated Servicer's
premises at the Servicer's expense.

          SECTION 6.8   APPOINTMENT OF SUCCESSOR.

               (a)    Subject to Section 6.1(a), on or after (i) the time the
Servicer receives a notice of termination pursuant to Section 6.1 (a) or 6.7 or
(ii) the resignation of the Servicer pursuant to Section 6.1(c), the Back-Up
Servicer or, upon the termination of the Back-Up Servicer, a successor Servicer
appointed by the Funding Agent shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for in this Agreement, and shall be subject to all the
responsibilities, restrictions, duties, liabilities and termination provisions
relating thereto placed on the Servicer by the terms and provisions of this
Agreement; PROVIDED HOWEVER, that any such successor Servicer shall not be
liable for any acts, omissions or obligations of the Servicer prior to such
succession or for any breach by the Servicer of any of its representations and
warranties contained in this Agreement or in any related document or agreement. 
The Funding Agent and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.  If a
successor Servicer is acting as Servicer hereunder, it shall be subject to
termination under 6.7 upon the occurrence of any Servicer Termination Event
applicable to it as Servicer 

<PAGE>

and under Section 6.1(a).

               (b)    Except as otherwise specified herein, any successor
Servicer shall be entitled to such compensation as the Servicer would have been
entitled to under this Agreement if the Servicer had not resigned or been
terminated hereunder.

          SECTION 6.9 FORCE-PLACED INSURANCE  (a)  The Servicer may, if any
Obligor fails to obtain or maintain a physical loss and damage insurance policy,
obtain insurance with respect to the related Financed Vehicle and advance on
behalf of such Obligor, as required under the terms of the insurance policy, the
premiums for such insurance (such insurance being referred to herein as
"FORCE-PLACED INSURANCE").  All policies of Force-Placed Insurance shall be
endorsed with clauses providing for loss payable to the Funding Agent.  Any cost
incurred by the Servicer in maintaining such Force-Placed Insurance (the
"INSURANCE ADD-ON AMOUNT") shall only be recoverable out of premiums paid by the
Obligor(s) or Recoveries with respect to the Purchased Receivable, as provided
in paragraph (b) of this Section 6.9.

          (b)  In connection with any Force-Placed Insurance obtained hereunder,
the Servicer may, in the manner and to the extent permitted by applicable law,
require the Obligor(s) to repay the entire premium to the Servicer.  In no event
shall the Servicer include the amount of the premium in the amount financed
under the Receivable.  For all purposes of this Agreement, the Insurance Add-On
Amount with respect to any Receivable having Force-Placed Insurance will be
treated as a separate obligation of the Obligor and will not be added to the
Outstanding Balance of such Receivable.  The Servicer shall retain and
separately administer the right to receive payments from Obligors with respect
to Insurance Add-On Amounts or rebates of Force-Placed Insurance premiums.  If
an Obligor makes a payment with respect to a Receivable having Force-Placed
Insurance, but the Servicer is unable to determine whether the payment is
allocable to the Receivable or to the Insurance Add-On Amount, the payment shall
be applied first to any unpaid scheduled payments and then to the Insurance
Add-On Amount.  Recoveries on any Receivable will be used first to pay the
Outstanding Balance and accrued interest on such Receivable and then to pay the
related Insurance Add-On Amount.  If an Obligor under a Receivable with respect
to which the Servicer has placed Force-Placed Insurance fails to make scheduled
payments of such Insurance Add-On Amount as due, and the Servicer has determined
that eventual payment of the Insurance Add-On Amount is unlikely, the Servicer
may, but shall not be required to, purchase such Receivable from the seller on
any Subsequent Settlement Date.  Any such Receivable, and any Receivable with
respect to which the Servicer has placed Force-Placed Insurance which has been
paid in full (excluding any Insurance Add-On Amounts) will be assigned to the
Servicer.

<PAGE>

                                     ARTICLE VII

                                  TERMINATION EVENTS

          SECTION 7.1 TERMINATION EVENTS.

     The occurrence of any of the following shall constitute a "Termination
Event":

               (a)    the breach of any representation or warranty or failure to
perform or observe any covenant by the Seller, the Originator or the Servicer;
PROVIDED, that with respect to any Purchased Receivable with respect to which it
is determined that there has been a breach of any covenant or representation and
warranty, such breach shall not constitute a Termination Event hereunder if the
Seller has repurchased such Receivable in accordance with the terms of Section
8.2;

               (b)    the Delinquency Ratio is greater than 7.0%;

               (c)    the average for any three (3) consecutive Settlement
Periods of the Monthly Extension Rate exceeds 4%;

               (d)    the Net Yield for any Settlement Period is less than 5%;

               (e)    the Weighted Average Credit Score is less than 580 or the
average of all LTVs for the Purchased Receivables is greater than 100%;

               (f)    the failure to reduce to zero the Net Pool Balance
pursuant to a Permitted Securitization Transaction or a Permitted Originator
Transaction at least once during a six-month period;

               (g)    the failure to maintain Interest Rate Hedges meeting the
requirements of Section 5.1(l);

               (h)    an Event of Bankruptcy shall occur with respect to the
Originator, the Servicer or the Seller;

               (i)    the Originator, the Servicer, AFL or the Seller:  (i)
shall default in the performance of any payment or undertaking pursuant to any
Facility Document; or (ii) with respect to any outstanding credit agreement,
other than in connection with the Facility, representing a commitment or
outstanding Indebtedness 

<PAGE>

in excess of $5,000,000, shall default in any payment of principal or interest
or shall default in any other respect the effect of which is to cause or permit
the holders of indebtedness pursuant to any such agreements to cause the
acceleration of such Indebtedness (in each case, after giving effect to all
applicable cure periods in any such credit agreement);

               (j)    the filing of any action or proceeding against AFL (or any
Subsidiary thereof) after the date hereof as to which there is a reasonable
possibility of an adverse determination in such action or proceeding and either
(i) if adversely determined, such action or proceeding could reasonably be
expected, individually or in the aggregate, to have a material adverse effect on
the business, operations or financial condition of AFL or AFL and its
Subsidiaries taken as a whole, or (ii) such action or proceeding challenges the
enforceability of, or the interest of, the Funding Agent in all or a portion of
the Purchased Receivables pursuant to any of the Facility Documents and the
transactions contemplated hereby and thereby, or (iii) challenges the validity
or enforceability of any material portion of the Purchased Receivables;

               (k)    any final rulings or judgments against, or settlements by
(x) AFL (or any Affiliate or Subsidiary) for damages in excess of $5,000,000 in
the aggregate, or (y) the Seller for damages in excess of $50,000 in the
aggregate, excluding, in either case, any such ruling or judgment that is
otherwise covered by insurance or that is discharged or stayed within 60 days;

               (l)    the occurrence of a Servicer Termination Event or a
Purchase Termination Event, or the Receivables Purchase Agreement shall have
terminated by its own terms;

               (m)    the Funding Agent shall, for any reason, fail to have a
valid and perfected first priority security interest in the Receivables and
other Purchased Assets and the proceeds thereof;

               (n)    the Originator, the Servicer or the Seller shall enter
into any transaction or merger whereby it is not the surviving entity or shall
sell all or substantially all of its assets to another Person (except pursuant
to a Permitted Securitization Transaction or a Permitted Originator Transaction)
unless it has given prior written notice thereof to the Funding Agent and the
following conditions are met:  (a) such surviving entity or such Person, as the
case may be, assumes the obligations of  such Person; (b) the Required Banks
consent in writing; and (c) the Rating Agency Condition is satisfied;

               (o)    on any Settlement Date, after giving effect to the
distribution of Collections, the Net Investment as set forth in the related
Monthly Report exceeds the product of the Advance Percentage and the Net Pool
Balance as set forth in the related Monthly Report and such condition remains in
effect until the next 

<PAGE>

succeeding Determination Date;

               (p)    the long-term debt rating of any hedge counterparty under
any Interest Rate Hedge is below A by S&P or A2 by Moody's, unless a new hedge
counterparty acceptable to each Agent is in place or collateral acceptable to
each Agent has been posted within ten (10) Business Days;

               (q)    the average for any three (3) consecutive Settlement
Periods of the Active Bankrupt Account Balance (averaged for each such
Settlement Period) DIVIDED BY the Servicing Portfolio Balance (averaged for each
such Settlement Period) exceeds 4.25%;

               (r)    the Net Credit Loss Ratio exceeds 6%; 

               (s)    an unwaived event of default (as therein defined) under
any of AFL's public asset-backed transactions shall occur and either (i) the
holders of any asset-backed securities, their representatives or any credit
enhancement providers shall take any action to accelerate the maturity of such
asset-backed securities, or (ii) the same remains uncured and unwaived for a
period of more than forty-five (45) days; 

               (t)    one or more Special Charges to the Seller or the Servicer
during any six-month period which taken together equal or exceed $50,000,000;

               (u)    the long-term debt rating of AFL falls below B- by S&P or
B3 by Moody's; and

               (v)    the amount on deposit in the Reserve Account shall fall
below the Minimum Reserve Account Balance and shall remain so for one (1)
Business Day.

then, and in any such event, the Funding Agent may (and, if so required by the
Asset Purchase Agreement, shall), by notice to the Seller, declare the
Termination Date to have occurred, except that, in the case of any event
described in subsection (f) or (h) above, the Termination Date shall be deemed
to have occurred automatically upon the occurrence of such event.  Upon any such
declaration or automatic occurrence, the Funding Agent, PARCO and the APA Banks
shall have, in addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of the
applicable jurisdiction and other applicable laws, which rights shall be
cumulative.

<PAGE>

                                     ARTICLE VIII

                             INDEMNIFICATION; REPURCHASES

          SECTION 8.1 INDEMNITIES BY THE SELLER.

               (a)    Without limiting any other rights which any Affected Party
may have hereunder or under applicable law, the Seller hereby agrees to
indemnify each Affected Party and its officers, directors, shareholders,
employees or agents, from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys' fees
and disbursements (all of the foregoing being collectively referred to as
"INDEMNIFIED AMOUNTS") awarded against or incurred by such Affected Party
arising out of or as a result of the following items, excluding, however, (i)
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of any Affected Party or (ii) recourse (except as
otherwise provided for in this Agreement) for uncollectible Purchased
Receivables:

                    (i)     reliance on any representation or warranty made or
          deemed made by the Seller or the Servicer (or any of their respective
          officers) under or in connection with this Agreement, any Monthly
          Report, any Purchase Notice or any other information or report
          delivered by the Seller or the Servicer pursuant hereto, which shall
          have been false or incorrect in any material respect when made or
          deemed made or delivered;

                    (ii)    the failure by the Seller or the Servicer to comply
          with any term, provision or covenant contained in this Agreement or
          the other Facility Documents to which it is a party or with any
          applicable law, rule or regulation with respect to any Receivable, the
          related Contract or the Related Security, or the nonconformity of any
          Receivable, the related Contract or the Related Security with any such
          applicable law, rule or regulation;

                    (iii)   the failure as a result of any action by the Seller
          or the Servicer (so long as AFL or any Affiliate thereof is the
          Servicer) to vest and maintain vested in the Funding Agent or to
          transfer to the Funding Agent, on behalf of PARCO and the APA Banks,
          an interest in the Receivables which are, or are purported to be,
          Purchased Receivables, together with all Collections and Related
          Security, free and clear of any Lien except in favor of any Affected
          Party, whether existing at the time of the Purchase of such Receivable
          or at any time thereafter;

<PAGE>

                    (iv)    the failure to file, or any delay in filing (other
          than solely as a result of the action or inaction of any Affected
          Party), financing statements or other similar instruments or documents
          under the UCC of any applicable jurisdiction or other applicable laws
          against the Seller with respect to any Receivables which are, or are
          purported to be, Purchased Receivables, whether at the time of any
          Purchase or at any subsequent time;

                    (v)     any dispute, claim, offset or defense (other than
          discharge in bankruptcy of the Obligor) of the Obligor to the payment
          of any Receivable which is, or is purported to be, a Purchased
          Receivable (including, without limitation, a defense based on such
          Receivable or the related Contract not being a legal, valid and
          binding obligation of such Obligor enforceable against it in
          accordance with its terms);

                    (vi)    any failure of the Servicer, to perform its duties
          or obligations in accordance with the provisions of Article VI;

                    (vii)   any products liability claim or personal injury or
          property damage suit or other similar or related claim or action of
          whatever sort arising out of or in connection with the Financed
          Vehicle related to any Receivable or Contract;

                    (viii)  the failure to pay when due any taxes, including,
          without limitation, sales, excise or personal property taxes payable
          by the Seller or the Originator in connection with the Purchased
          Receivables;

                    (ix)    the commingling of any Collections of Purchased
          Receivables with any other funds except to the extent expressly
          permitted hereunder; or

                    (x)     any other event similar in nature to the foregoing
          which (A) arises or results from such Affected Party's participation
          in the transactions evidenced by this Agreement or the ownership of
          the Purchased Assets or in respect of any Receivable or any Contract
          and (B) involves the failure of the Seller or the Servicer to perform
          its obligations hereunder or the documents executed pursuant hereto.

<PAGE>

Any amounts subject to the indemnification provisions of this Section 8.1 shall
be paid by the Seller to the Funding Agent for the benefit of the Affected
Parties within two Business Days following the Funding Agent's demand therefor.

               (b)    If any Affected Party is required to compensate a APA Bank
as a result of any event or circumstance similar to those described in clauses
(i) through (x) above (excluding, however, (i) compensation for amounts to the
extent resulting from gross negligence or willful misconduct on the part of such
APA Bank or (ii) recourse (except with respect to payment and performance
obligations provided for in applicable documentation with such APA Bank) for
uncollectible Purchased Receivables), then within ten (10) days after demand by
such Affected Party, the Seller shall pay to such Affected Party such additional
amount or amounts as may be necessary to pay such APA Bank the amounts due or to
otherwise reimburse such Affected Party for any amounts paid by it.

          SECTION 8.2 REPURCHASE OF RECEIVABLES.  The following rights are in
addition to and not in limitation of any other rights or remedies that PARCO,
the APA Banks or the Funding Agent may have hereunder.

               (a)    If, with respect to any Purchased Receivable, (i) such
Receivable did not constitute an Eligible Receivable on the date such Receivable
became a Purchased Receivable (or the Funding Agent notifies the Seller that any
Receivable which became a Purchased Receivable on the date of such Purchase is
not an Eligible Receivable) or the Seller shall have breached any representation
or warranty made hereunder with respect to such Receivable, including, without
limitation, any of the representations and warranties contained in Section
4.1(g),  (ii) such Receivable, after the date such Receivable became a Purchased
Receivable, became subject to any BONA FIDE dispute, claim, offset or defense
(other than the discharge in bankruptcy of the Obligor) of the Obligor to the
payment of such Receivable (including, without limitation, a defense based on
such Receivable  or the related Contract not being a legal, valid and binding
obligation of  such Obligor enforceable against it in accordance with its terms)
or (iii) the Seller shall at any time breach any covenant made herein with
respect to any such Receivable (a Purchased Receivable described in any of
clauses (i), (ii) or (iii) above being referred to as an "INELIGIBLE PURCHASED
RECEIVABLE"), then the Seller shall on the next succeeding Settlement Date, upon
the Funding Agent's demand, repurchase such Ineligible Purchased Receivable for
the repurchase price specified in subsection (c) of this Section 8.2.  In
addition, the Seller may, at any time, notify the Funding Agent of its intent to
repurchase any Purchased Receivable (i) which is a Defaulted Receivable or (ii)
in connection with the rewriting and/or restructuring of the related Contract as
an accommodation to, and at the request of, the Obligor thereunder (other than
for reasons relating to a decline in the creditworthiness of the Obligor
thereof).  On the Settlement Date next succeeding any such notice, the Seller
shall repurchase such 

<PAGE>

Defaulted Receivable or rewritten or restructured Purchased Receivable for the
retransfer price specified in subsection (c) of this Section 8.2.

               (b)    At any time following the Termination Date when the
Outstanding Balance of the Purchased Receivables is less than ten percent (10%)
of the Outstanding Balance of the Purchased Receivables as of the Termination
Date, the Seller may notify the Funding Agent of its intent to repurchase all
remaining Purchased Receivables.  On the Settlement Date next succeeding any
such notice, the Seller shall repurchase all outstanding Purchased Receivables
for the retransfer price specified in subsection (c) of this Section 8.2.

               (c)    In the case of a repurchase from PARCO or the APA Banks,
as applicable, by the Seller or the Servicer of a Purchased Receivable pursuant
to this Section 8.2, the Seller or the Servicer shall, on the Settlement Date
coinciding with such repurchase, pay to the Funding Agent, for application in
accordance with Section 2.5 of this Agreement (as applicable), as a reduction of
Net Investment an amount equal to the Outstanding Balance of such Purchased
Receivable plus all accrued and unpaid interest, finance charges, fees and other
amounts due under the related Contract; PROVIDED that any repurchase under this
Section 8.2 which requires a payment by the Seller to any counterparty to an
Interest Rate Hedge as a result of the termination of such Interest Rate Hedge
shall be effective only upon the making of such payment to such counterparty.
The proceeds of any such repurchase shall be deemed to be Collections of such
Receivable received by the Seller, and the amount of each such Collection shall
be applied as provided in Section 2.5. The repurchase of any Receivable shall
not relieve the Seller of the obligation to pay Discount on the Net Investment
outstanding with respect to such Receivable through the date of such repurchase.
Any such repurchase shall be made without recourse or representation or
warranty, express or implied (other than a representation and warranty that such
Receivable is free and clear of any Lien created by or through the Funding Agent
for the benefit of PARCO and the APA Banks).

               (d)    The Seller, the Servicer and the Funding Agent, as the
case may be, shall inform the other parties to this Agreement promptly, in
writing, upon the discovery of any breach of the Servicer's covenants pursuant
to Section 5.4(a) (v), 5.4(a) (vi), 5.4(a)(vii), 5.4(a)(viii), 5.4(c)(i),
5.4(c)(ii) or 5.4(c)(iii); PROVIDED that the failure to give such notice shall
not relieve the Servicer of its repurchase obligations under this Section
8.2(d).  Unless such breach shall have been cured by the last day of the first
full calendar month following the discovery by or notice to the Servicer of the
breach, the Servicer shall repurchase any Purchased Receivable with respect to
which such breach has a material adverse effect on such Purchased Receivable or
the 

<PAGE>

interest therein of the Funding Agent, PARCO or the APA Banks.  Such repurchase
shall occur for the same retransfer price and pursuant to the same procedures
applicable to repurchases by the Seller pursuant to subsection (c) of this
Section 8.2.

               (e)    If, with respect to any Purchased Receivable, (i) such
Receivable, after the date such Receivable became a Purchased Receivable,
becomes subject to any BONA FIDE dispute, claim, offset or defense (other than
the discharge in bankruptcy of the Obligor) of the Obligor to the payment of
such Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and binding
obligation of  such Obligor enforceable against it in accordance with its terms)
or (ii) the Servicer, for so long as the Servicer is AFL, shall at any time
breach any covenant made herein with respect to any such Receivable, then the
Servicer, so long as the Servicer is AFL, shall on the next succeeding
Settlement Date, upon the Funding Agent's demand, repurchase such Purchased
Receivable for the repurchase price specified in subsection (c) of this Section
8.2. 
<PAGE>

                                      ARTICLE IX

                                    MISCELLANEOUS

          SECTION 9.1 AMENDMENTS, ETC.

               (a)    Subject to clause (b) below, no amendment to or waiver of
any provision of this Agreement nor consent to any departure by any party to
this Agreement shall in any event be effective unless the same shall be in
writing and signed by all of the parties hereto, and then such waiver, amendment
or consent shall be effective only in the specific instance and for the specific
purpose for which given.  This Agreement contains a final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire Agreement (together with
the exhibits hereto) among the parties hereto with respect to the subject matter
hereof, superseding all prior oral or written understandings.

               (b)    The Seller may extend the Final Termination Date for an
additional 364 days from time to time with the written consent of the Funding
Agent, PARCO and the APA Banks, which written consent, if so given, shall be
delivered to the Seller no later than sixty (60) days prior to the Final
Termination Date then in effect.  The Seller shall request any such extension no
later than the ninetieth (90th) day prior to the Final Termination Date then in
effect.

          SECTION 9.2 NOTICES, ETC.  All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication and communication by facsimile copy) and mailed,
telexed, transmitted or delivered, as to each party hereto, at its address set
forth under its name below or at such other address as shall be designated by
such party in a written notice to the other parties hereto.  All such notices
and communications shall be effective, upon receipt, or in the case of delivery
by mail, five days after being deposited in the mails, or, in the case of notice
by telex, when telexed against receipt of answer back, or in the case of notice
by facsimile copy, when verbal communication of receipt is obtained, in each
case addressed as aforesaid, except that notices and communications pursuant to
Article II shall not be effective until received.

<PAGE>

          IF TO THE SELLER:

          ARCADIA RECEIVABLES FINANCE CORP. V
          7825 Washington Avenue South
          Suite 902
          Minneapolis, Minnesota 55439-2444
          Attention:  Treasurer
          Telephone:  (612) 942-9880
          Telecopy:  (612) 942-6620

          IF TO THE SERVICER:

          ARCADIA FINANCIAL LTD.
          7825 Washington Avenue South
          Suite 500
          Minneapolis, Minnesota 55439-2444
          Attention:  Treasurer
          Telephone:  (612) 942-9880
          Telecopy:  (612) 942-6620

          IF TO PARCO:

          PARK AVENUE RECEIVABLES CORPORATION
          c/o Global Securitization Services, LLC
          25 West 43rd Street, Suite 704
          New York, New York  10036
          Attention:  President
          Telephone:  (212) 302-5151
          Telecopy:    (212) 302-8767

          (with a copy to the Funding Agent)

          IF TO THE FUNDING AGENT:

          THE CHASE MANHATTAN BANK
          450 West 33rd Street
          15th Floor
          New York, New York  10001
          Attention:  Andrew Taylor
                Structured Finance Services
<PAGE>

          Telephone: (212) 946-7861
          Telecopy:  (212) 946-7776

          SECTION 9.3 NO WAIVER; REMEDIES.  No failure on the part of the
Funding Agent, PARCO or any APA Banks to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.  The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.  Without limiting
the foregoing, the Funding Agent is hereby authorized by the Seller at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (whether general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by Chase or any Affiliate of either of them to or for the credit or the account
of the Seller against any and all of the obligations of Seller, now or hereafter
existing under this Agreement or under any agreement executed pursuant hereto,
to the Funding Agent, PARCO or any APA Bank or their respective successors and
assigns irrespective of whether or not demand therefor shall have been made
under this Agreement or under any agreement executed pursuant hereto.  The
Seller acknowledges that the rights of the Funding Agent, PARCO and the APA
Banks or any of their respective successors and assigns described in this
paragraph are in addition to other rights and remedies (including, without
limitation, other rights of set-off) such parties may have.

          SECTION 9.4 BINDING EFFECT; ASSIGNABILITY.  (a)  This Agreement shall
be binding upon and inure to the benefit of the Seller, the Servicer, the
Funding Agent, PARCO, the APA Banks and their respective successors and
permitted assigns (which successors of the Seller shall include a trustee in
bankruptcy).  This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until such time, after the Termination Date, as the
Final Collection Date shall occur; PROVIDED, HOWEVER, that the rights and
remedies with respect to any breach of any representation and warranty made by
the Seller pursuant to Article IV and the indemnification and payment provisions
of Articles II and VIII  shall be continuing and shall survive any termination
of this Agreement.

          (b)  The Seller may not assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the
Funding Agent.

          (c)  At any time and from time to time, PARCO may, without the consent
of the Seller, assign all or a portion of its interests in Purchased Assets
hereunder to the related APA Banks pursuant to its Asset Purchase Agreement. 
Each APA Bank shall also be entitled to sell its interests (or portions thereof)
to other APA Banks pursuant to the terms of the related Asset Purchase
Agreement.  If 

<PAGE>

PARCO (or any APA Bank) makes any such assignment, it shall provide notice to
the Seller of any assignment hereunder or thereunder and, to the extent of such
assignment, shall have no further rights hereunder.  The Seller shall have the
right to consent (which consent will not be unreasonably withheld) to any Person
(other than Chase) becoming a APA Bank.

          SECTION 9.5 GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York.  Each of the parties hereto each hereby waives any right to have a jury
participate in resolving any dispute, whether sounding in contract, tort, or
otherwise among any of the Seller, the Servicer, PARCO, the APA Banks or the
Funding Agent arising out of, connected with, related to, or incidental to the
relationship between them in connection with this Agreement.  Instead, any
dispute resolved in court will be resolved in a bench trial without a jury. 
With respect to the foregoing consent to jurisdiction, each of the Seller and
the Servicer hereby waives any objection based on FORUM NON CONVENIENS, and any
objection to venue of any action instituted hereunder and consents to the
granting of such legal or equitable relief as is deemed appropriate by the
court.

          SECTION 9.6 COSTS, EXPENSES AND TAXES.  (a) In addition to the rights 
of indemnification under Article VIII hereof, the Seller agrees to pay on demand
all reasonable costs and expenses in connection with the preparation, execution,
delivery and administration (including periodic auditing and any requested
amendments, waivers or consents) of this Agreement and the other documents to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Funding Agent, PARCO and the APA Banks
with respect thereto and with respect to advising the Funding Agent, PARCO and
the APA Banks as to their respective rights and remedies under this Agreement,
and the other agreements executed pursuant hereto and all costs and expenses, if
any (including reasonable counsel fees and expenses), in connection with the
enforcement of this Agreement and the other agreements and documents to be
delivered hereunder.

               (b)     In addition, the Seller shall pay any and all stamp,
sales, excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement
or the other agreements and documents to be delivered hereunder, and agrees to
indemnify the Funding Agent, PARCO and the APA Banks against any liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.

               (c)     In addition, the Seller shall pay on demand all other
costs and expenses incurred by PARCO or any shareholder of such PARCO ("OTHER
COSTS"), including, without limitation, the cost of auditing PARCO's books by
certified public accountants, the cost of rating PARCO's promissory notes by
independent financial 

<PAGE>

rating agencies and the reasonable fees and out-of-pocket expenses of counsel
for such Person or any counsel for any shareholder of PARCO with respect to (i)
advising PARCO or such general or limited partner or shareholder as to its
rights and remedies under this Agreement, (ii) the enforcement of this Agreement
and the other documents to be delivered hereunder or (iii) advising PARCO or
such general or limited partner or shareholder as to matters relating to PARCO's
operations; PROVIDED, HOWEVER, that if PARCO enters into or has entered into
agreements with Other Sellers, the Seller and such Other Sellers shall each be
liable for such Other Costs ratably in accordance with the usage under the
respective facilities of PARCO to purchase receivables (or make loans secured by
receivables) from the Seller and each Other Seller; and PROVIDED, FURTHER, that
if such Other Costs are attributable to the Seller and not attributable to any
Other Seller, the Seller shall be solely liable for such Other Costs. 
Notwithstanding the foregoing, the Seller shall not pay Other Costs in excess of
$5,000 annually.

          SECTION 9.7 NO PROCEEDINGS.  Each of the parties hereto hereby agrees
that it will not institute against, or join with any other Person in instituting
against, PARCO any proceeding of the type referred to in clause (i) of Section
7.1(g) so long as any Commercial Paper or other notes issued by PARCO shall be
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such Commercial Paper or other notes shall have been
outstanding.

          SECTION 9.8 EXECUTION IN COUNTERPARTS; SEVERABILITY. This Agreement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement.  In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

          SECTION 9.9 CONFIDENTIALITY. (a)  Each of the Seller and the Servicer
shall maintain, and shall cause each officer, employee and agent of itself and
its Affiliates to maintain, the confidentiality of this Agreement and the other
Facility Documents and all other confidential proprietary information with
respect to PARCO, the Funding Agent and the APA Banks and each of their
respective businesses obtained by them in connection with the structuring,
negotiation and execution of the transactions contemplated herein and in the
other Facility Documents, except for information that has become publicly
available or information 

<PAGE>

disclosed (i) to legal counsel, accountants and other professional advisors to
the Seller, the Servicer and their Affiliates, (ii) as required by law,
regulation or legal process, including, without limitation, information
disclosed as an exhibit to AFL's annual and quarterly reports to the Securities
and Exchange Commission on Form 10-K and Form 10-Q or (iii) in connection with
any legal or regulatory proceeding to which the Seller, the Servicer or any of
their Affiliates is subject.  Each of the Seller and the Servicer hereby
consents to the disclosure of any non-public information with respect to it
received by PARCO, the Funding Agent or any APA Bank to (i) any of PARCO, the
Funding Agent or any APA Bank, (ii) any nationally recognized rating agency
providing a rating or proposing to provide a rating to PARCO's Commercial Paper,
(iii) any placement agent or commercial paper dealer which proposes to offer and
sell PARCO's Commercial Paper, (iv) any provider of PARCO's program-wide
liquidity or credit support facilities, (v) any potential APA Bank or (vi) any
participant or potential participant (which Person, in the case of clauses 
(iii) - (vi), agrees in writing to be bound by the confidentiality provisions 
of this Section 9.9(a)).

          (b)  Each of PARCO, the Funding Agent and the APA Banks shall
maintain, and shall cause each officer, employee and agent of itself and its
Affiliates to maintain, the confidentiality of this Agreement and the other
Facility  Documents and all other confidential proprietary information with
respect to the Seller, the Servicer and their Affiliates and each of their
respective businesses obtained by them in connection with the structuring,
negotiation and execution of the transactions contemplated herein and in the
other Facility Documents, except for information that has become publicly
available or information disclosed (i) to legal counsel, accountants and other
professional advisors to the Seller, the Servicer and their Affiliates, (ii) as
required by law, regulation or legal process or (iii) in connection with any
legal or regulatory proceeding to which the Seller, the Servicer or any of their
Affiliates is subject.

          SECTION 9.10  LIMITED RECOURSE TO PARCO.   Notwithstanding anything to
the contrary contained herein, the obligations of PARCO under this Agreement are
solely the corporate obligations of PARCO and (i) in the case of obligations of
PARCO other than Commercial Paper, shall be payable at such time as funds are
actually received by, or are available to, PARCO in excess of funds necessary to
pay in full all outstanding Commercial Paper and, to the extent funds are not
available to pay such obligations, the claims relating thereto shall not
constitute a claim against PARCO,  but shall continue to accrue.  Each party
hereto agrees that the payment of any claim (as defined in Section 101 of Title
11, United States Code (Bankruptcy)) of any such party against PARCO shall be
subordinated to 

<PAGE>

the payment in full of all of PARCO's outstanding Commercial Paper. 

          No recourse under any obligation, covenant or agreement of PARCO
contained in this Agreement shall be had against any incorporator, stockholder,
officer, director, member, manager, employee or agent of PARCO, Chase, Global
Securitization Services, LLC or any of their Affiliates (solely by virtue of
such capacity) by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise; it being expressly agreed and
understood that this Agreement is solely a corporate obligation of PARCO, and
that no personal liability whatever shall attach to or be incurred by any
incorporator, stockholder, officer, director, member, manager, employee or agent
of PARCO, Chase, Global Securitization Services, LLC or any of their Affiliates
(solely by virtue of such capacity) or any of them under or by reason of any of
the obligations, covenants or agreements of PARCO contained in this Agreement,
or implied therefrom, and that any and all personal liability for breaches by
PARCO of any of such obligations, covenants or agreements, either at common law
or at equity, or by statute, rule or regulation, of every such incorporator,
stockholder, officer, director, member, manager, employee or agent is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement; PROVIDED that the foregoing shall not relieve any such Person
from any liability it might otherwise have as a result of their willful
misconduct or of fraudulent actions taken or fraudulent omissions made by them.

          SECTION 9.11 WAIVER OF SETOFF.  Each of the parties hereto hereby
waives any right of setoff it may have or to which it may be entitled under this
Agreement from time to time against PARCO or its assets.

          SECTION 9.12 CONFLICT WAIVER.  (a)  Chase acts as Funding Agent and as
program administrative agent for PARCO, as issuing and paying agent for PARCO's
Commercial Paper, as provider of other backup facilities for PARCO, and may
provide other services or facilities from time to time (the "CHASE ROLES"). 
Each of the parties hereto hereby acknowledges and consents to any and all Chase
Roles, waives any objections it may have to any actual or potential conflict of
interest caused by Chase's acting as the Funding Agent or as an APA Bank under
the Asset Purchase Agreement and acting as or maintaining any of the Chase
Roles, and agrees that in connection with any Chase Role, Chase may take, or
refrain from taking, any action consistent with its obligations under the
Facility Documents which it in its discretion deems appropriate. 

          SECTION 9.13  LIABILITIES AND RIGHTS OF FUNDING AGENT.
(a) Notwithstanding any provision of this Agreement or any other Facility
Document:  (i) the Funding Agent shall not have any obligations under this
Agreement or any other Facility Document other than those specifically set forth
herein and therein, and no implied obligations of the Funding Agent shall be
read 

<PAGE>

into this Agreement or any other Facility Document; and (ii) in no event shall
the Funding Agent be liable under or in connection with this Agreement or any
other Facility Document for indirect, special, or consequential losses or
damages of any kind, including lost profits, even if advised of the possibility
thereof and regardless of the form of action by which such losses or damages may
be claimed.  Neither the Funding Agent nor any of its respective directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken in good faith by it or them under or in connection with this Agreement
or any other Facility Document, except for its or their own gross negligence or
willful misconduct.  Without limiting the foregoing, each Funding Agent (a) may
consult with legal counsel (including counsel for PARCO), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts, (b) shall not be responsible to
PARCO, the APA Banks, the Seller or the Servicer for any statements, warranties
or representations made in or in connection with this Agreement or the other
Facility Documents, (c) shall not be responsible to PARCO, the APA Banks, the
Seller or the Servicer for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Facility Documents, (d) shall incur no liability under or in respect of any of
the Commercial Paper or other obligations of PARCO under this Agreement or the
other Facility Documents and (e) shall incur no liability under or in respect of
this Agreement or the other Facility Documents by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by facsimile) believed by it to be genuine and signed or
sent by the proper party or parties.  Notwithstanding anything else herein or in
the other Facility Documents, it is agreed that where a Funding Agent may be
required under this Agreement or the other Facility Documents to give notice of
any event or condition or to take any action as a result of the occurrence of
any event or the existence of any condition, such Funding Agent agrees to give
such notice or take such action only to the extent that it has actual knowledge
of the occurrence of such event or the existence of such condition, and shall
incur no liability for any failure to give such notice or take such action in
the absence of such knowledge.

          (b)  The Funding Agent hereby represents and warrants to the Seller
and the Servicer that it is duly authorized to act on behalf of PARCO and the
APA Banks.

          SECTION 9.14  FURTHER ASSURANCES.  The Seller hereby agrees to do such
further acts and things and to execute and deliver to the Funding Agent, for the
benefit of PARCO and the APA Banks, such additional assignments, agreements,

<PAGE>

powers and instruments as are required by the Funding Agent to carry into effect
the purposes of this Agreement or to perform its obligations hereunder or to
receive its rights, remedies and benefits hereunder for the benefit of PARCO and
the APA Banks.

<PAGE>

          IN WITNESS WHEREOF, the parties have caused this Receivables Transfer
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                    ARCADIA RECEIVABLES FINANCE CORP. V, 
                         as Seller


                    By:
                         Name:
                         Title:


                    ARCADIA FINANCIAL LTD.,
                         individually and as Servicer


                    By:
                         Name:
                         Title:


                    PARK AVENUE RECEIVABLES CORPORATION,
                         as purchaser


                    By:
                         Name:
                         Title:


                    THE CHASE MANHATTAN BANK, 
                         individually and as Funding Agent


                    By:
                         Name:
                         Title: